How Early Is Too Early? When Parents Should Start A 529 Plan For Their Children

Emily Malecha |

Saving up and paying for college can place a financial burden on families, especially for families who are sending multiple children to college at the same time. If your family is seeking options to help reach this financial goal, you might consider starting a 529 plan. It’s important to start stowing away tax-sheltered money for your children’s education as early as infancy.

By the time they’re ready to head off to college, there should be a comfortable nest egg saved to help pay for school and relevant expenses. It’s true that college tuition costs are outpacing inflation at an alarming rate, and it’s a big concern to most parents. However, if you have $50 and a few minutes to spare, you could open a 529 Savings Plans account today. Since your account can grow tax-deferred, you may accumulate more money over time, so the sooner you open the account and start funding it, the better.

You have the option to choose from a variety of investments that fit your timeline and investment goals, including an Enrollment Year Investment Option. Over time, this option automatically shifts from aggressive to conservative investments as your child approaches their expected year of enrollment in school. You can apply the funds to any eligible state or private college, technical school, or community college.

Perhaps the biggest benefit of these accounts is that you are able to make tax-free withdrawals for qualified purchases such as room and board, books, computers and related technology expenses, equipment and supplies. In addition, up to $10,000 annually per student, in aggregate from all 529 plans, can be withdrawn free from federal tax if used toward K-12 school tuition. 

It’s understandable why many parents feel torn between the choice of funding their retirement or their child’s education. Of course, ensuring your child receives a college education is important, but retirement should be the priority and if possible, save for both. There’s no need to get overwhelmed if you cannot pay for all of college - start small, early and invest steady!

If you have questions about starting a 529 plan, reach out to a Confidere Financial professional today.


A 529 Plan is a tax-advantaged investment program designed to help pay for qualified education costs. Participation in a 529 Plan does not guarantee that the contributions and investment returns will be adequate to cover higher education expenses. Contributors to the plan assume all investment risk, including the potential for loss of principal and any penalties for non-educational withdrawals.

Your state of residence may offer state tax advantages to residents who participate in the in-state plan. You may miss out on certain state tax advantages, should you choose another state’s 529 Plan. Any state-based benefits should be one of many appropriately weighted factors to be considered in making an investment decision. You should consult your financial, tax, or other advisor to learn more about how state-based benefits (including any limitations) would 66 Real Life Financial Planning apply to your specific circumstances. You may also wish to contact your home state’s 529 Plan program administrator to learn more about the benefits that might be available to you by investing in the in-state plan.


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