July 22, 2021

A Big Boost for Education Savings

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One of the most effective ways to save for education-related expenses is through a 529 plan. However, recent legislation made significant changes to how 529 plans can make saving for college even more advantageous for families.

The SECURE Act (passed last year) now allows 529 funds to be used to pay back student loans and expenses related to apprenticeship programs which are common in a variety of fields.

The Consolidated Appropriations Act made changes to how 529 plan contributions impact need-based financial aid. Currently, distributions taken from a grandparent-owned account and used for education expenses must be shown as income on FAFSA (Free Application for Federal Student Aid) applications.

The new FAFSA questionnaire, which will be in effect for the 2023-2024 academic year, no longer requires students to disclose cash support. This allows grandparents to contribute to their grandchildren’s education without affecting eligibility for need-based financial aid.

529 plans offer grandparents gifting and estate planning benefits. Contributions to plans are considered gifts and are removed from the owner’s taxable estate, but the owner maintains control. Contributions can be front-loaded in the amount of five times the annual exclusion, $75,000 for individuals and $150,000 for joint filers, and made in a single year without gift tax as long as no other contributions to that beneficiary are made during the five-year calendar period. This can be done for as many beneficiaries as the contributor desires.


Call or email today to learn more.


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Galina Berkovich, CPA
Partner/ Woodland Hills, Beverly Hills
DK Wealth Management LLC
21600 Oxnard Street, Suite 2000
Woodland Hills, CA 91367

Tel 818-385-0585

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Suzie Korth, EA
Partner, University Heights
DK Wealth Management LLC
4304 Park Blvd.
San Diego, CA 92103

Tel 619-295-2637

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Kristopher Lindley, CFP®
Financial Consultant
DK Wealth Management LLC
12555 High Bluff Drive, Suite 210
San Diego, CA 92130

Tel 619-550-4619

DK Wealth Management LLC | La Jolla | University Heights | Woodland Hills | Beverly Hills

Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

Investment advice offered through Integrated Financial Partners, doing business as DK Wealth Management LLC, a registered investment advisor. DK Wealth Management LLC and its individual partners are solicitors to Integrated, compensated for solicitor services. DK Wealth Management LLC and its individual partners do not provide investment advice. DK Wealth Management LLC and its individual partners are not affiliated with Integrated Financial Partners. Click on the links for a copy of the firm’s ADV and solicitor disclosure statement.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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