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American Focus > Blog > Economy > A 529 account can make saving for your child’s future go farther
Economy

A 529 account can make saving for your child’s future go farther

Last updated: June 1, 2025 10:00 am
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A 529 account can make saving for your child’s future go farther
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With the rising cost of college tuition, many families are finding it increasingly challenging to save for their children’s higher education. According to a recent study by the Society of Actuaries, 6 in 10 Americans have had to delay their retirement in order to save for a family member’s education.

Tricia Scarlata, head of education planning at JPMorgan Asset Management, stressed the importance of utilizing a 529 account to help families meet their education savings goals. In a recent episode of Yahoo Finance’s Decoding Retirement podcast, Scarlata highlighted the benefits of investing in a 529 plan for tax-free growth and compounding over time.

A 529 plan is a tax-advantaged savings account specifically designed for education expenses. While commonly used for college savings, these accounts can also be used for trade schools or K-12 tuition. The funds in a 529 account are invested, allowing for tax-deferred earnings that can be used for qualified education expenses.

Scarlata provided an example to illustrate the significant difference a 529 account can make when saving for education. By comparing a taxable account to a tax-free 529 account, she showed that the tax-free account could yield almost $42,000 more in savings over 18 years with regular contributions.

In addition to the financial benefits, Scarlata also emphasized the importance of avoiding borrowing against retirement savings to pay for a child’s education. She cautioned against jeopardizing retirement funds, as borrowing against a 401(k) could lead to missed employer matches and lost opportunities for growth.

Furthermore, Scarlata dispelled the misconception that funds in a 529 account would go to waste if the designated beneficiary decides not to attend college. She explained that after 15 years, up to $7,000 can be rolled over into a Roth IRA annually, with a lifetime cap of $35,000, offering alternative options for the funds.

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Planning for a child’s education may seem restrictive, but Scarlata emphasized that it ultimately benefits the entire family in the long run. By setting aside funds in a 529 account, parents can ensure that their children have the resources they need for higher education without sacrificing their retirement savings.

Ultimately, Scarlata stressed that education planning is a family decision and that parents should prioritize saving for their children’s future education to secure their financial well-being in the long term. By taking proactive steps to save for education expenses, families can avoid financial strain and set their children up for success. If you’re a fan of thrilling and engaging content, then look no further than our video hub. With a wide range of episodes to choose from, there’s something for everyone to enjoy. Whether you’re into action-packed adventures, heartwarming dramas, or laugh-out-loud comedies, you can find it all on our platform.

And the best part? You can watch all your favorite shows on your preferred streaming service. Whether you’re a Netflix aficionado, a Hulu enthusiast, or an Amazon Prime Video connoisseur, you can easily access our content on the platform of your choice. So sit back, relax, and let the entertainment come to you.

With a diverse selection of episodes and a user-friendly interface, our video hub is the perfect destination for all your viewing needs. So why wait? Head over to our platform today and start exploring the endless possibilities of entertainment that await you.

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