Nicole Lapin

i wish someone had opened for me i set up a 529 for education not because college is guaranteed but because options matter i grew up watching people make decisions based on what they could afford in that very moment not what they actually wanted in the long run and i didn't want that for her when i posted this i got a bunch of messages from parents from people who had never had these conversations with their parents

from people who grew up in households where money was a source of dread, not a tool, and who are now trying to break that cycle for their own kids.

So today I'm going to go deeper into the accounts that I opened for my daughter.

These will help you with your kids, but it might help you with something for yourself.

as well.

And let's double click on the account that I just mentioned, the 529 plan.

A 529 plan is a tax advantaged investment account for educational expenses.

You've probably heard of it.

What you might not know, though, is that it is far more flexible than it used to be.

Yes, it covers tuition, books, room and board, even a required laptop.

But it can also be used for K through 12 tuition up to 20K per year, trade schools, apprenticeships and even some international institutions.

And thanks to a relatively new change, if your kid doesn't use the money for school at all, you can roll up to $35,000 of unused 529 funds into a Roth IRA in their name as long as the account has been open for at least 15 years.

That means that college savings can become retirement savings, and that is a massive, massive shift.

Here's what I want to tell every parent who's just had a baby.

Open the 529 before the rest of life gets really loud and messy.

The math on time is unforgiving.

If you contribute $250 a month from birth, assuming a roughly 7% average annual return, you're looking at well over 100K by the time your kid is 18.

And over the course of those 18 years, you'll have only contributed about $54,000 to grow the account to 100,000.

But if you wait until your kid is, let's say, 10 to start, that account will end up being closer to $30,000 by the time they turn 18.

Same monthly contribution, very different outcomes.