March 18, 2021

Passing on Wealth Tax-Efficiently and the College Dilemma

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Paying for college is expensive and more and more grandparents are stepping in to help. You see, based on historical college data, the cost of a college education roughly triples over a 20-year period. That means, from the moment your grandchild is born they will face an average annual growth rate of 6.8%.1


A 529 plan is a tax-advantaged savings method used to cover education expenses for future generations. A 529 plan can reduce a grandparent’s estate, minimize potential gift tax, and helps to minimize estate taxes.

The benefit of 529 plans is that the value of the account is removed from the taxable estate while the account owner retains full control, including the right to select the beneficiary, direct the assets, reallocate the money, or take it back.



Contributions grow on a tax-deferred basis.
Withdrawals used to pay the beneficiary’s qualified education expenses are tax-free at the federal level.
All contributions qualify for the annual federal gift tax exclusion of $15,000 for individuals or $30,000 for joint gifts in 2021.



Taking advantage of the ability to fund a grandchild’s college education is a win for current and future generations.

Let’s discuss how this strategy may work in relation to your comprehensive financial plan.


BROUGHT TO YOU BY:

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Donna M. Feder, CPA
Partner/ Woodland Hills
DK Wealth Management LLC
21600 Oxnard Street, Suite 2000
Woodland Hills, CA 91367

Tel 818-385-0585
donna@dkllpcpa.com

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Thane F. Kelton, CPA
Partner/San Diego
DK Wealth Management LLC
4225 Executive Square, Suite 900
La Jolla, CA 92037-1485

Tel 858-642-5050
thane@dkllpcpa.com

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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
Kristopher.Lindley@LPL.com

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.

1 https://educationdata.org/average-cost-of-college

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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