Essentials
– 529 plan: Tax-deferred growth; tax-free withdrawals for qualified education; beneficiary can be changed within family; limited K-12 tuition allowed.
– Credits:
- AOTC: Up to $2,500 per eligible student; income limits; partially refundable.
- Lifetime Learning Credit: Up to $2,000 per return.
– No double-dipping: Expenses used for a credit cannot also make 529 withdrawals tax-free.
– Custodial (UTMA/UGMA): Flexible use; may trigger kiddie tax; no education-specific break.
– Recent flexibility: Certain rules allow limited 529-to-Roth IRA rollovers under conditions and caps.
Simple plan
Set a monthly 529 target → use an age-based portfolio → coordinate grandparent gifts → keep 1098-T and receipts to substantiate credits.
Wave Tax designs the tax strategy: account selection, 529-credit coordination, projected tax savings, and documentation checklist.
Request a College Tax Strategy Session with Wave Tax (virtual available).
Educational only; not financial or investment advice.