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Things to know about 529s

·1 min

The 529 is an education savings account that’s double and sometimes triple tax-advantaged: if you live in certain states, you can put pre-tax dollars in; the money grows tax-free in all states; and money can be withdrawn without paying any taxes as long as it’s for a qualified educational expense.

Here are important things to know:

  • You can open a 529 in any state, not just the state you’re in. If your state doesn’t have pre-tax benefits for 529 contributions, opening a 529 at Fidelity or Vanguard is a good bet.
  • Any unused amount after college can be rolled into a Roth IRA, up to 35k (as long as contributions were made more than 5 years ago)
  • You can withdraw up to 10% per year for private school, free from federal taxes
  • California does not consider private school withdrawals to be tax-free; you still pay CA income tax and a 2.5% penalty on these.

If you’re currently funding a 529 or considering it, try our 529 Calculator .