529 College Plans: Smart Education Savings for San Diego Families

Saving for your child or grandchild’s education can feel overwhelming—but it doesn’t have to be. At Fee Only Planners, we’re here to simplify it for you. Whether you’re a young family just starting to plan ahead or a grandparent hoping to leave a legacy, a 529 college plan might be one of the smartest moves you can make.

Let’s walk through how 529 plans work, what makes them so attractive (especially in California), and how to get started—without feeling like you’re earning a finance degree along the way.

What Is a 529 College Plan?

A 529 college plan is a tax-advantaged savings account specifically designed to help families invest in future education expenses. It’s named after Section 529 of the IRS Code and can be used to pay for tuition, books, supplies, and even room and board at eligible institutions.

Here’s why it’s awesome:

• Tax-deferred growth: Your investments grow without getting taxed every year.

• Tax-free withdrawals: When used for qualified education expenses, withdrawals are federal tax-free (and often state tax-free too).

• Flexibility: You maintain control of the account and can change the beneficiary if plans change.

You can also use up to $10,000 per year for K-12 tuition, or even up to $10,000 toward student loan repayment—making this more than just a college fund.

The Best 529 Plans in California

While there are plenty of 529 plans available nationwide, California’s ScholarShare 529 is a standout. It offers low-cost investment options, no annual maintenance fee, and flexibility whether you’re just getting started or ready to make a larger contribution.

Some key highlights of the ScholarShare 529:

• Managed by TIAA-CREF Tuition Financing, Inc.

• Offers both age-based and custom investment portfolios

• $25 minimum to start

• Easy online account management

Not sure if ScholarShare is the right fit? We can help you compare the best 529 plans across states, especially if you’re considering out-of-state options that offer better benefits or lower fees.

Pros and Cons of a 529 Plan

Every investment strategy has its tradeoffs. Let’s break down the pros and cons of a 529 plan so you can make a confident choice:

Pros:

• Tax benefits: Earnings grow tax-free, and withdrawals for education are also tax-free.

• High contribution limits: You can contribute up to $19,000 annually (or $38,000 for couples), and even make five years’ worth of contributions upfront without gift tax consequences.

• Control: The account owner (you) stays in control of how the money is used.

• Flexibility: Funds can be transferred to another beneficiary if plans change.

Cons:

• Penalties for non-education use: Withdrawals used for non-qualified expenses incur taxes and a 10% penalty on earnings.

• Investment risk: Like any market-based account, your contributions can fluctuate in value.

• No guaranteed returns: Growth depends on your investment choices and market performance.

If you’re unsure how to weigh these tradeoffs, speaking with a fiduciary financial advisor can provide clarity.

529 Plans as a Legacy Planning Tool

Thinking long-term? A 529 plan can be a beautiful legacy gift. Grandparents in particular can make significant contributions—up to $95,000 as a single filer or $190,000 as a couple in a single year (treated as five years’ worth of gifts).

These contributions are considered outside of your estate for tax purposes, making this a strategic tool for high-net-worth families who want to reduce estate taxes while investing in their family’s future.

Working with a San Diego Financial Planner

We get it—reading about 529s is one thing. Making a decision with real money involved? That’s where a trusted partner matters.

At Fee Only Planners, we’re a San Diego-based team of fiduciary financial advisors who help local families navigate education savings, retirement planning, and charitable giving. We don’t earn commissions—just your trust.

We’ll help you:

• Estimate your future education costs

• Choose the best 529 plan for your goals

• Create a custom contribution schedule that fits your financial plan

• Coordinate with your broader wealth and tax strategies

Whether you’re just learning about 529s or ready to fund one today, we’re here to guide the process from start to finish.

Ready to Start a 529 Plan? Let’s Talk.

Want to learn more about how a 529 college plan could work for your family? Or maybe you’re comparing the best 529 plans in California and wondering if ScholarShare 529 is the way to go?

Let’s simplify it. Our friendly team at Fee Only Planners is happy to walk you through your options, answer your questions, and help you build an education savings plan you feel confident about.

Contact us today to schedule a free intro call, or give us a ring at 858-547-1845.

We’ve helped dozens of San Diego families save for college while staying on track with their retirement goals. Let’s do the same for you.*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Fee Only Planners to provide information on a topic that may be of interest. Copyright 2024 Fee Only Planners.