This Week’s Blog Is Written By Scott D. Heins, CFP®, IAG Chief Investment Officer
August 19, 2026

Back to Cool

As the father of a sixteen-year-old daughter, I know I will never be as cool as I was a mere six years ago. The cruelty of time takes an inevitable toll on a dad’s perceived coolness.

Her circle of coolness now revolves around friends and school activities like choir and theater. Somewhat to her chagrin, she headed back to school yesterday to start her junior year. That means we are less than two years from making post-secondary school plans.

Thankfully, her uncool dad has been coolly saving for her future schooling in a 529 college savings plan since the day we adopted her. And, unlike dads, 529 college savings plans keep getting cooler as they get older.

Modern 529 plans are celebrating their 30th birthday this year. Initially they only permitted parents and grandparents to set aside funds on a tax-advantaged basis for future college tuition expenses. If the 529 plan funds are used for qualifying educational expenses, 529 plan distributions avoid federal taxes. Of course, using the funds for anything else results in federal income taxes and penalties.

Some states even offer limited state income tax deductions or state tax credits for 529 plan contributions. That is cool.

Since their 1996 inception, the definition of qualifying education expenses has coolly expanded to include many other educational costs. 529 plans may now be used for:

• College room and board (within certain guideline
• College books and supplies
• Computer and internet expenses
• K-12 tuition (up to $10,000 per year)
• Student loan payments (up to $10,000 per lifetime)
• Certain apprenticeship program expenses
• Making Roth IRA contributions for the 529 plan beneficiary up to $35,000 lifetime (if the account has been open at least 15 years and meets other criteria)

As an added bonus, 529 plan assets are treated very favorably when calculating eligibility for financial aid. If the 529 plan is owned by the student or a parent, the account is considered a parental asset for financial aid calculations. 529 plans owned by grandparents are not counted at all.

529 plans are also cool from an estate planning perspective. Contributions are considered a completed gift and are no longer included in the account owner’s estate. However, the owner retains control over the account as long as they wish. There are even provisions that allow taxpayers to pre-fund five years of their annual gift exclusion ($19,000 in 2026) to a 529 plan.

As with all tax laws, there are exceptions, quirks, and limits to 529 plan rules. Be sure to consult with a qualified tax professional to evaluate your personal circumstances before making any decisions.

However, if you are looking for a cool way to help pay for school, 529 plans should definitely be on your cool friend list.

Quote of the week: Mark Twain: “When I was a boy of 14, my father was so ignorant I could hardly stand to have the old man around. But when I got to be 21, I was astonished at how much the old man had learned in seven years.”

Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through IAG Wealth Partners, LLC, (IAG) a registered investment advisor and separate entity from LPL Financial. Jason Ganiere is solely an investment advisor representative of IAG Wealth Partners LLC, and not affiliated with LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. No strategy assures success or protects against loss. Investing involves risk including loss of principle.

ART: 1161359
Photo Credit: iStock 1333584354