Money Moves; How 529 Savings Plans Benefit You & Your Grandchild

Money Moves; How 529 Savings Plans Benefit You & Your Grandchild


School is in session again, but it’s not all backpacks and glue sticks. It’s also a good time to start investing in your grandchild’s future.

Those kids may be skipping off to kindergarten today, but blink and they’ll be freshmen in college tomorrow. We talked with a couple of experts who reminded us that putting money away for college now pays off — literally.

Money in the Bank

Investing in a 529 college savings plan not only sets the kiddos up for a comfortable college experience, it also earns you a nice little state tax deduction. Ka-ching.

David Wright, finance director at University School’s Shaker Campus, says there are two major advantages to these plans.

“You get a state deduction. There are certain limits depending on your income status, but you get some sort of state tax deduction,” he explains. “As that money grows, it grows tax-free. So, if I have a 5-year-old child and I put $10,000 into the 529 and it grew to $18,000, once I start taking that $18,000 out, it’s all tax-free. In a normal investment account, that $8,000 would be taxed at capital gains, so that’s the main advantage.”

You can be sure the money you invest in these plans will be used for education purposes, too.

“What’s nice about a 529 is whoever is putting money (in), they physically own the asset,” Wright says. “The student doesn’t own that money. The account is in their name, but there are penalties if the student doesn’t spend it on education.”


Not Just for College Anymore

Have you heard? Now 529 funding can go toward K-12 tuition at private or religious schools. Karin Maloney Stifler is a certified financial planner with Walden Wealth Partners in Solon and specializes in helping families with decisions such as 529 accounts.

“If education has been a family tradition and core value, it’s a wonderful way to leave a lasting legacy,” she says. “The estate tax advantage of placing assets in 529 plans is also compelling. 529 plan assets are not included in taxable estates. This can save significant estate taxes for high net worth families.”

Janyse Heidy is a sales consultant in northeast Ohio who is getting creative with ways to add money to her 529 accounts. She and her mother created accounts for her 2-year-old granddaughters, Addison Mae and Madeline Rae. To get the accounts going, they decided to sell some antique pieces.

“We have an amazing collection of lady head vases,” Heidy says. “They are ceramic vases of a lady’s face. There are some famous ones like Lucille Ball and Jackie Kennedy. Many were made in the ’40s and ’50s. I am in the process of selling half of my mother’s collection — the half that she could part with — and all the money is going to go to the 529 plan for her great-grandchildren. It’s really neat. She opened it up with $1,000 for each one, and then we’ve been slowly funneling money into the accounts since.”

The women started the accounts to fund the girls’ college tuition but now are happy to use the money to send the girls to a private school.

“I’m excited about it,” Heidy says. “The fact that it’s not just for college anymore is huge, and it gives grandparents the opportunity to be more active in their grandchildren’s lives.”



Learn more about education options available in the area by attending Northeast Ohio Parent’s Education Expo on Sept. 23.

About the author

Breanna Mona is a Northeast Ohio freelance writer specializing in entertainment features and theater reviews.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may also like

Planes, (Dress) Trains & Automobiles New Year, New Discoveries at NEO Museums

Take a fresh look at Northeast Ohio's museums this winter. You'll like what you'll discover - military airplanes, high fashion and quirky exhibits. Try one a week (or more) and see what's new - and old - in art, nature and history.