Using 529s for Multigenerational Education Planning
Long valued as a tax-smart way to pay for a child's college education, 529 plans have another, less obvious use: multigenerational education planning.
Unlike most other tax-advantaged savings accounts, 529 plans don't have annual contribution limits. Instead, they have total contribution limits set by the state in which they're administered, ranging from $235,000 in Georgia and Mississippi to $596,925 in New Hampshire. Better yet, even if the total contribution limit is reached, there's no law that limits how large the account can grow over time or how long it can remain open.
Given the high contribution limits and unrestricted growth potential, it's easy to see how a well-funded 529 account could cover education costs for generations—provided your plan permits it.
For this strategy to work, your plan must allow you to both change the beneficiary and name a successor account owner so that unused funds can be tapped by future generations.
You're free to choose a plan administered in any state, though you may not be able to deduct contributions to an out-of-state plan from your state taxes. (Thirty-six states and the District of Columbia offer tax credits or deductions for contributions to their state-sponsored 529 plans, and nine of those states offer a state income tax benefit for contributions to any 529 plan.)
In 2025, individuals can contribute up to $19,000 per year and couples up to $38,000 per year without eating into their lifetime gift and estate tax exemption (for 2025, $13.99 million for individuals and $27.98 million for married couples). However, if you want to superfund your 529's growth potential, you can contribute five years' worth of gifts in a single year—$95,000 for an individual and $190,000 for a couple—so long as you treat those gifts as occurring over five successive tax years.
Finally, be aware that while the ability to change beneficiaries and name a successor account owner are important features of a 529 plan, Congress could potentially change the laws in the future to limit the transfer of 529 plan assets across multiple generations. However, in the current climate, where laws are being passed to expand the use of 529 plans, such a scenario seems unlikely at the moment.
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This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.
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This information is not a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager, Estate Attorney) to help answer questions about specific situations or needs prior to taking any action based upon this information.
Investors should consider, before investing, 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 in such state's qualified tuition program.
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