Are you missing out on one of the most powerful tax-advantaged ways to save for your kids’ education?
Saving for your children’s education can feel overwhelming, especially when you’re balancing student loans, retirement planning, and a busy medical career. Yet one of the most effective tools available to physician families, the 529 plan, is often misunderstood or underused.
In this episode, Daniel Wrenne is joined by Theresa Scheu to break down how 529 plans actually work and why starting early can make a significant difference. They discuss the tax advantages, how state plans vary, and why many physician families benefit from using these accounts as part of a long-term education strategy.
Listen in to learn how 529 plans provide tax-free growth for education expenses, why early contributions benefit from compounding, how to evaluate state plans and potential tax deductions, and the flexible ways these accounts can be used for education across your family.
—————————————————————————————————————————
Transform your financial outlook today! Access our exclusive free resources for physicians and conquer financial stress. Access here. P.S. We value your opinion! Share your thoughts and insights with us. Your feedback helps us improve and tailor our content to your needs. Click here to give us a piece of your mind.
Links
- Compare 529 Plans
- 529 Plans by State
- Morningstar 529 Ratings: The Best Plans of 2025
- Connect with Theresa Scheu on LinkedIn
- Connect with me on my LinkedIn
- Contact Finance for Physicians
- Finance for Physicians
- To schedule a call with one of our awesome planners, book HERE.
Full Episode Transcript:
Theresa Scheu: Well, one thing with my husband and I… we started funding our accounts when the kids were newborns. But my husband was like, “Why would we do this? They’re newborns. College is so far away.” And then I showed him a compounding chart of, wait, we can put this amount of money in now and then stop funding. That money will grow. Whereas if we wait 10 years, it’ll be X amount more money that we’ll have to save. And for him and his brain, that worked.
Welcome to Finance for Physicians, the show where we help physicians like you use money as a tool to live a great life. I’m your host, Daniel Wrenne, and I’ve spent the last decade advising physicians on their personal finances with the mission to help them understand that taking control of their finances now means creating a future where they can practice medicine where, when, and how long they want to.
Daniel Wrenne: Theresa, welcome to the podcast.
Theresa Scheu: Hello.
Daniel Wrenne: You’re usually behind the scenes, but today you are in the front and center.
Theresa Scheu: Yes.
Daniel Wrenne: We’re talking about a fun topic, at least for us personal finance geeks, but I think it should be a topic everybody’s thinking about, especially if you have kids. And so we’re gonna be covering the 529 plan and talk in particular about some of the misunderstandings or misconceptions about how it works.
Those kinds of things can have major costs to those of you guys listening. I’ve personally encountered a lot of those misconceptions and misunderstandings in our work, one-on-one with families. I said we’re gonna talk through a little bit about how they work, why they’re beneficial, why they might be problematic, and then also cover—intertwine some of these misunderstandings. So yeah, we will we’ll be covering that.
Theresa Scheu: Great.
Daniel Wrenne: So Theresa maybe we should get into a little bit—we’re not gonna get into the weeds too much, but just high level, let’s talk about what is a 529? Like what makes it so unique?
Theresa Scheu: Yeah, so a 529, I like to think of it as a Roth account for college savings. So this idea that you’re putting after-tax dollars into an account where you’re ideally investing in it in an appropriate way from the perspective of when your kid’s gonna go to college.
So often these accounts will have similar to what you see in a retirement account, a target date fund, or the ability to make your own investment portfolio. And ultimately, that money grows tax-free. And as long as you use the distributions to pay for an approved educational expense, then there are no taxes paid on that money when they come out.
So, it’s a really powerful vehicle, especially if you start early for saving for college. So, some unique things that you’ll see in a 529 that you won’t see in a Roth account is that these particular funds are run by the state. So you don’t necessarily have to use the 529 that is provided by your state, but you will have an option in your state. And really what you wanna look for is the tax advantages of using your state 529 versus a different state. So some states, like I’m in Massachusetts, I don’t have a really great state tax write-off.
But I do get a $2,000 deduction for my state taxes when I make a contribution. So everyone on the federal level, on the distributions, gets the same treatment depending on what state you’re in. And the state tax rules in your state, you may also get a deduction on/or a credit on the front end as well.
Daniel Wrenne: So taking a little bit step back. So Roth, just as a reminder, like that’s goes in after you’ve paid tax on the money, and then it’s tax-free for as long as it’s there.
Theresa Scheu: Yeah.
Daniel Wrenne: And then when you, we take it out. So Theresa said Roth for education. So it’s same tax wise kind of. I mean, for the most part it’s same tax wise in that goes in after tax free as long as it’s there and then when you take it out, if it’s used for qualified expenses, that’s the part that it’s a little different than a Roth. Qualified expense, it’s gotta be used for certain qualified ex expenses, and if you use it for those, it’s tax free.
The other difference between the Roth is that it can sometimes be tax beneficial on the front end. And Theresa was also mentioning, that depends on states. Every state’s different. But there is potential, depending on your state to get some tax advantage on the front end as well, which makes it potentially slightly better. But the big thing I always emphasize with the 529 is when you get something that’s like, like all the tax benefits are on the backend. Same with Roth.
Like day one, you don’t get much or any tax benefit. There’s no tax benefit day one. ’cause it’s like your money’s already been taxed and it just goes in there. But like the benefit comes when it starts to grow.
And if you know about compound interest, it’s all about time. And the longer the time that goes by, the bigger the compounding, and it gets exponential. And so when you have exponential or compounding growth for really long periods of time, the tax benefit becomes massive because all of that growth is what’s the part that’s tax free.
And so just like the Roth, the 529 plan, it’s really especially beneficial if you can get started earlier, the earlier the better. And because you can really save a lot on the growth, the tax free part of it.
And so the unique parts about it, that’s really where it shines in terms of the tax benefits, but it gets a little confusing.
Like it’s not a little, it’s super confusing actually. Like every state has one, and then each state has different tax treatment of it. Like that’s extremely confusing. But let’s try to boil it down a little bit. What’s the…??
Theresa Scheu: Yeah. And I think if people are getting overwhelmed with this idea of there’s too many options.
Take a look at your state plan there. In the show notes, we’ll provide a couple resources too to help look at the different state plans. But at the end of the day, they’re all pretty much structured similarly in that what you’re looking for, just like you would look for in your retirement accounts or low cost funds.
They have that, again, that target date fund is, I think, the majority of our clients are in a target date fund when it comes to college savings. So I think you can get overwhelmed by the options, but start with your own state, and as long as it’s a gold kind of, I think Morningstar rates ’em, and if they’re gold or higher, I think you’ll probably be in really good shape from an account perspective.
Daniel Wrenne: Yeah. And there’s some… there’s a pretty big range in the states. There’s some really bad 529s. I know Kentucky, I live in Kentucky and there’s no tax benefits associated with living in Kentucky and funding a 529.
So it doesn’t matter if you fund a 529 or not, it doesn’t affect your taxes in the front end.
And then also Kentucky has its own 529 plan that a lot of people think they need to use ’cause they live in Kentucky, but they definitely don’t have to. And it definitely doesn’t affect your taxes living in Kentucky ’cause there’s no tax benefit on the front end.
But, also, the Kentucky 529 happens to be not a great one. So I would never typically suggest like starting with a Kentucky 529, just as an example. And each state’s a little different, but there’s some bad ones.
And then there’s also the advisor thing. Like a lot of 529s have embedded commissions on the funds to pay advisors. So this might be the case if you’ve had… I don’t know. If you worked with an advisor like out of in residency or something like that, and they were like an insurance advisor, like at a brokerage firm or they, they didn’t charge you a fee to work with them. That’s a classic scenario.
And so a lot of times they sell 529 plans and they almost always have commissions on the funds. And so that’s important because you might not realize that you’re in one of those plans and you’re paying pretty hefty commissions, even if you’re not really working with the advisor anymore.
So that’s something to look out for as well. You wanna watch for the expenses.
Theresa Scheu: And I’ll tell you, Morningstar will tell Utah 529 is the one that keeps coming up as always on the top of the list. So if your state doesn’t have a great plan, take a look at Utah’s 529.
I think Nevada too tends to have a pretty high rating as well. So there, again, we’ll share some resources on where to look at the kind of the top plans. So if you take a look at yours, it’s not a good fit. It has some of the issues that Daniel is talking through. There are resources to figure out what might be a better fit.
Daniel Wrenne: Yeah. And then the tax benefits we started to hit on there’s tax deductions and tax credits. Most 529s… well, you can get a list, you can Google a list of all of the states and essentially you’d ask is, does my state offer a tax deduction on 529 contributions? And you should be able to get a pretty straightforward answer.
There’s, I don’t know, probably half or maybe three-quarters of states offer some form of tax deduction. And then there’s, I know for sure there’s at least one that has a tax credit. Indiana has a really good tax credit for funding a 529. The difference is—a credit is like you get straight dollars for funding it.
It’s like if you put a hundred dollars in, you get $5 back on your taxes. I’m just throwing out an example of what a credit is. And whereas a deduction is just, it reduces your taxable income. So it’s a percentage savings per dollar. And so typically when you do the math on it, tax credits are much better.
But you want to understand—so Theresa, what’s Massachusetts deduction?
Theresa Scheu: Yeah, it’s a $2,000 married couple deduction.
Daniel Wrenne: So that’s like effectively, that’s if you made $100,000, well Massachusetts and you put $2,000 in a 529, Massachusetts is well, “We’ll count it as 98 ’cause you did that.”
And so that’s $2,000 less of income, multiplied by whatever the state tax rate is. So, it’s not typically gonna be a substantial savings. So you can kinda weigh that into the situation. Like I’ve seen states that have very low deductions, very low tax benefits, and also they require you to use their state 529 to get the deduction.
And their state 529 also happens to be super crappy. So it’s like the net of all that, it’s eh, we’re gonna use a different state. You can just forfeit the deduction. That’s possible in certain instances. And then the other thing I was gonna throw out, just ’cause it’s like this is such clear stuff as, let’s make it more complicated, is the tax parity thing we were talking about earlier, Theresa.
There’s a handful of states that… I think it’s nine states, but I’ll list them. As of this recording it’s Arizona, Arkansas, Kansas, Maine, Minnesota, Missouri, Montana, Ohio, and Pennsylvania. If you’re in one of those states, they’ll give you the tax deduction whether you fund the 529 in their state or any other state.
So that’s nice because it allows you to basically look at all the different states’ 529s and pick the more competitive one. And you don’t have to necessarily use that state 529.
Theresa Scheu: Yeah. Great.
Daniel Wrenne: That all make sense?
Theresa Scheu: It makes sense to me.
Daniel Wrenne: Yeah. Let us know if it doesn’t make sense.
Theresa Scheu: Yeah. So I think one thing we also hear from folks, and I think we just wanted to talk about briefly is this idea about flexibility with these accounts. So like a retirement account, you’re locking up these money, this money for a particular purpose, and it’s to fund education.
Sometimes when we talk this idea of starting early, there’s a lot of unknowns in 18 years and 15 years and 10 years. So I think a hesitancy or some concerns about whether or not these accounts make sense knowing that—you think your kid’s gonna go to college, but maybe they don’t or what if they get a giant scholarship? Or those types of things.
So I think we just wanted to talk a little bit about how these accounts work and what are some potential ways to use those funds if they don’t go the traditional route?
Daniel Wrenne: Yep. I think the way I like to look at it is it’d be great if we could predict the future. That would be helpful for this because it’s all about like how much are you going to spend in the future on education? So that’s the big, huge question mark. And when I say future, the rest of your life and potentially even beyond that.
We’ll talk a little bit about that, but the question is, how much are you gonna spend in the future, in your lifetime, and potentially beyond that, on these qualified expenses, which are education and related expenses?
So I’ll throw out an example. Let’s say you have 7 kids—nobody’s probably gonna have that’s on the high end. But let’s say 7 kids and all of them are in private K through 12. You expect to pay for all their private school tuition. I don’t know how you could afford that, but it’s just hypothetical.
And then your goal is to also pay for all of their undergrad four years tuition, room and board at Ivy League schools. And then also your goal is to fund, they’re all gonna go to medical school. And that, and you’re gonna fund all that for them as well. Like all seven of them. I’m giving you the extreme example to paint the picture.
It’s like that sort of extreme situation, if that’s the goal, it’s like we’re super confident you’re gonna have future spending on education. So like it’s more a matter of how much can you put in as opposed to whether or not you should fund a 529. That’s like a home run sort of 529 use case.
Still it becomes a question as to how much you can put in, but that’s a scenario where it’s very obvious that it would make sense to fund; most people are not quite in that extreme scenario. So say you got a couple kids and they’re not gonna go to private K through 12, but you do know you want to fund their undergrad tuition room and a board; both children’s tuition room and board four years, and let’s just say it’s average in state, public university costs.
But you don’t want to fund anything beyond that, like that’s probably a more common, low cost, common, scenario. So in that scenario, you could, say, well, let’s look at funding, say, 50% of their future expected costs for tuition, room and board, at least to start. Because you never know whether they’re gonna get scholarships or whatnot.
And this could be something you start when they’re a newborn. And then the other thing about that is you can look at it every single year. And the goals change as well.
AD BREAK
Daniel Wrenne: Let’s take a quick break to talk about our firm, Wrenne Financial Planning.
The goal of our podcast is to empower you to make better financial decisions, but sometimes the best financial decision you can make is to work with someone who understands your financial goals and has the expertise to keep you on track to reach them. That’s where Wrenne Financial Planning comes in. We are a full-service financial planning firm that works with over 400 physicians and their families across the country.
We charge a transparent monthly flat fee for our services and offer virtual meetings you can take from anywhere. Best of all, you’ll get to work with a team that specializes in working with physician families. So whether you’re starting out and wondering how you’ll balance your student loan payments and saving for a home, or you are established physician trying to figure out how to pay for your kids’ college and how much you need to save to reach financial freedom, we can help.
I’ll put a link in the show notes to schedule a no-obligation meeting with one of our certified financial planners. Wrenne Financial Planning, LLC is a registered investment advisor. For more information about our firm, please visit wrennefinancial.com. That’s W-R-E-N-N-E financial.com.
AD BREAK END
Daniel Wrenne: And I’m hitting on the education use case, like the nice thing about it, maybe you could go into that, Theresa. There’s a fair amount of backup options.
Theresa Scheu: Yeah, and I think, what Daniel’s talking about the K through 12, that’s something that is relatively new from something you can use these accounts for.
So as of, I think summer 2025, they actually bumped up initially was $10,000 you could use per year. Now it’s $20,000 per year worth of educational expenses for K through 12 at private school. So that’s something outside of the traditional undergrad that you can use it for; they’ve also expanded it as of summer of 2025 to include testing and SAT-related costs.
So that’s more things on the front end before you get to college at least. And then I think many may have heard there this, now you actually can use funds… funds to fund a Roth account, a true Roth account. There are a lot of stipulations with that.
And it’s a lifetime $35,000 that you can do. So that’s an additional thing that you can use these funds for. Trade schools as well are you can use the funds to trade to do that. And then also too, there are things that may come up over the years that you can use it for. These accounts are flexible from the perspective of your family unit.
So for example, my husband last year decided he wanted to take some continuing ed courses, and I was able to take funds from one of my kids’ 529 plans and transfer that over within minutes to pay for him to take those classes. And that is totally allowable with the IRS. And so you can use it for yourself as well.
So I could have transferred that money over to me and created an account and done it that way. Extended family as well. And then also I think Daniel kind of alluded to this, there’s a legacy component to this as well. So the account is your account and you have your beneficiaries. You, as the owner of that account, can change those beneficiaries.
So your kids may not go to college or they go to college; you have leftover funds. Then you can actually use those funds to pay for your grandchildren as well. So there’s a lot of options how to use these funds.
Daniel Wrenne: Yeah. And I was talking with somebody the other day, and they started to get the whole like flexibility part and they’re like, okay, well.
“How do we like, make sure and fund the grandkids education now?” And I’m like, well, that’s the kind of the right mindset now. They still have young kids, so it’s a little hard to—not a little hard—it’s almost impossible to pinpoint that cost. But the way I look at it is that’s just one additional reason to maybe think about getting more aggressive with it now because it’s just added flexibility.
Whereas if they were like, you can only use it. It used to be you could, well, 10 years ago, well, I guess five years ago, it was a lot more limited in what you could use the 529 for. And since then, they’ve opened it up, like for example, the K through 12, and now it’s $20,000.
That’s added potential things you can use it for. And then the Roth IRA. That it’s gonna make it more appealing to get a little more aggressive in how much you’re funding it. At the end of the day, you’re still gonna wanna look at what is the goal and how much do you need to fund to reach the goal.
Another thing, last thing I’ll throw out on the funding part is a lot of people are like, well, should I fund it for tuition next year? My kids are in private school. Okay. Say they’re in high school or something and should I use it to start funding their tuition for next year. ’cause whatever, I pay it annually.
And so that’s a good question, but the problem with that approach—well, it’s not a problem—it’s just you don’t get a lot of the…going back to what we were saying at the beginning, the biggest tax benefit is all about the compound growth and tax-free interests, and it’s not on the front end of your contribution most of the time.
Now, you gotta look at your state to understand that fully, but on the average, it’s mostly about the compound growth for long periods of time. So there is a little bit of tax benefit in putting the money in and then using it six months or a year from. Because you’ll save some interest on it and it’s better to have it be tax-free, but it’s not near as good as if you were to use it for, say, education costs 10 or 15 years from now.
So the way I look at that is I say, let’s try to backfill it, let’s back fill the furthest out years that you can confidently plan for. And then, as it gets more full, let’s say those, the future longer-term goals are already a hundred percent funded, then you might be thinking about using it to fund next year’s tuition.
Just ’cause you’ve already covered the furthest out years. They get the most bang for your buck.
Theresa Scheu: Yeah. So Daniel, when we’re working with clients and they’re trying to get a sense of like how much money to put into the 529, like what the end point is, like what things, how do we talk to clients about how much they should put in that, in an ideal case, like how much money they should be investing in a 529?
Daniel Wrenne: Yeah. It goes back to the scenarios I was throwing out. Like we want to understand how important it is to them, what their goals are for funding education. But I’ll use the example of the two children, and they want to fund four years of undergrad only.
And that’s the goal. We’re gonna try to explain the pros and cons and look at the numbers, but it might be that we settle on let’s go ahead and start saving monthly. Let’s just say it’s $300 a month or something per child. Let’s go ahead and start saving monthly. The equivalent of what we’ve calculated needs to be set aside so that you get to 50% funded in the time when they’re gonna be in undergrad.
Or, another way of looking at it would be like you’re gonna be able to fund two of the four years. And the reason you would potentially say 50% funding is because that gives you lots of wiggle room. If you’re a little concerned about the downsides of the 529 and it being limited to being used for education to where you can use other things. Or maybe you’re like, “My kids are gonna get full scholarships ’cause we’re amazing athletes or whatever.”
Theresa Scheu: Yeah.
Daniel Wrenne: It just builds in the flexibility. So that’s usually—that’s just an example, hypothetical. Sometimes we have the conversation, people are like, well, let’s go ahead and get to 100% funding and we can always pare down.
It’s like if you’re funding the thing monthly, you can change it a ton of different—you can change it each year and adjust.
Theresa Scheu: One thing I think I forget sometimes too is that depending on your career and where you are, there may be a good chance you’re working during this time and can cash flow some of this as well.
Especially if you’re in a high cost of living state, like I put two kids in daycare and I look back now, and they were both in daycare. I was paying a private school college tuition for a year. And I cash flowed that and then, when one kid, it was still a state school.
So yeah, I think that there is that component of wells as well as your cashflow.
Daniel Wrenne: And I think a bigger issue that comes up, you had mentioned this before we were recording that we see causing issues is it’s not as the technical side of it, it’s more like making sure families, or especially the couples, are on the same page with what is the goal for this? And how important it is.
Because in my conversations it’s pretty rare that both spouses are like rock solid on the same page. More often it’s one spouse. Sometimes it’s one spouse is “I don’t want to fund any college. I pay for…” Usually it’s like “I don’t wanna fund any college. I paid for it myself and I’d like my kids to learn the hard good lessons that I learned as a result of paying it myself.”
And then the other spouse is well, my family funded mine completely, and it gave me the huge financial benefits of not having to take out student loans, and I want my kid to experience that. So that is two totally different viewpoints.
Theresa Scheu: Yeah, for sure.
Daniel Wrenne: So coming to a compromise is a good… That’s an important starting point. You can’t just be like, “Well, even though we’re on two polar opposites, we’re just gonna fund the 529 or not fund it.”
It’s like what’s the compromise?
Theresa Scheu: Well, one thing with my husband and I, when we started funding our accounts when the kids were newborns. But my husband was like “Why would we do this? They’re newborns. College is so far away.” And then I showed him a compounding chart of, “Wait, we can put this amount of money in now and then stop funding. That money will grow. Whereas if we wait 10 years, it’ll be X amount more money that we’ll have to save.
And for him and his brain, that worked.
But everyone’s different. And the other thing too is I was talking to Dana a little too about this idea that also, you may have family members who have dropped hints that they may wanna contribute for college.
And it is probably in everyone’s best interest, and I know, these can be weird conversations, but get a sense of what they’re planning. Because the other thing too is you don’t want to have a fully funded 529 and then you find out your grandparents have also started a 529.
I know of that has happened before too, where you have dueling accounts. So it’s just good to be on the same page with other family members as well. So that can help with planning and you can use it in the context of, “Hey, we’re trying to plan this out and be thoughtful about what we’re saving. You’ve commented that you wanted to contribute, can you gimme a sense of what you’re thinking?” That kind of thing.
Daniel Wrenne: I’ve talked to families that got a little more proactive about this, and for example, they were like, to their family. They were like, “We would prefer that you stop sending us like the garbage, plastic toys stuff. We got enough of those. And then it’d be great if you could fund the kids’ 529s instead.”
Theresa Scheu: Yeah.
Daniel Wrenne: And then the family was like, “Oh, okay.” And so it’s pretty easy actually to set that up in most 529s where you—
Theresa Scheu: Yeah. A lot of them are very upfront with like gifting type links that you can send to relatives.
Daniel Wrenne: Rransparent, friendly, or whatever.
Theresa Scheu: Yeah. Yeah. So that’s great too.
Daniel Wrenne: Much better too. And so, yeah, getting on the same page, communication and then even like proactively suggesting they would prefer gifts go there instead of the junk that people a lot of times buy. And yeah, communication is the big thing. Even with the kids themselves, when they get to—you’re not gonna be like your newborn or five-year-old, “Hey, by the way, you got a 529.”
But maybe seven and eight years old. I know some people start to talk to their really young kids about the 529s, but you have to be careful. I could see two sides. It’s like I don’t want my kid to think like they’re golden, but I also don’t want my kid to think they got nothing, and a lot of parents I think are struggling with that, and then they just do nothing.
Theresa Scheu: Yeah. And I think you can, I’ve thought about this too ’cause both my sons have separate 529 accounts. And the truth is you don’t have—you can say that we’re—you’re saving and that I think it’s really important to tell them at an age appropriate, whether it’s end elementary, junior high, but do it before they’re looking at colleges, kinda what the expectation is from what you expect from them, from a funding perspective and what you’re planning on giving, because that will set them up to maybe, hopefully, be more realistic in what they’re looking at college-wise.
So it’s less about the dollar amount, but the fact that whether or not you are saving. And essentially what the expectations are from what the parent, you as a parent, want to contribute, and what they should be anticipate to contribute as well.
Daniel Wrenne: Yeah, because, and even if you have none, no 529s, you probably ought to let your child know like, “By the way, you’re on your own for college. FYI.”
Theresa Scheu: Yeah.
Daniel Wrenne: I knew I was in a good spot. Well, I was in a spot where it was obvious because my parents were basically broke, so I’m like, “Eh, they’re not finding my college.”
So I was like, there’s no need to have the conversation, but I think I could see that being more likely. I didn’t grow up in this case, but I could see it being more likely when your parents like drive nice cars and they’re in a nice house. Oh yeah. And the kids are like, “My parents have money.”
It is like usually just the conclusion. So in that case, they’re gonna be like, my parents have money, so therefore they are gonna fund my college. And then that would be a big letdown when the kids are like, “Oh, shoot.”
Theresa Scheu: Yeah. Yeah. Totally. So, yeah. So any parting thoughts?
Daniel Wrenne: Did we hit on any other misunderstanding?
Theresa Scheu: I think for the most part, yeah.
Daniel Wrenne: Yeah, I mean they’re generally great tools if you know you’re gonna have future education costs.
Theresa Scheu: Oh, one thing too, just so people—this is a misconception around what you can use these funds for or not. So this idea, people throw out this, they get a full-ride scenario.
If that is the case, there are ways to take the funds out of the 529 that are equivalent to the scholarship. You’ll have to pay taxes on it, but you won’t be penalized for it. So in that scenario, it is not a make-or-break it with your 529 funds, you will be able to access the funds in a, in an equivalent fashion.
So that’s just wanna take that off the table as a…
Daniel Wrenne: Yeah. And they’re so flexible in terms of like when you take it out, so that you can be pretty strategic about it. You can be like, well, let’s figure out the most optimal… like if you’re in a situation where you know you’re gonna have to pay the taxes on it because there’s just no way to use it for education, you can start to be like, well, okay, and now we’re shifting to let’s see how strategic we can possibly get to minimize the tax as much as possible. And it’s pretty flexible in that regard. It’s like you can kinda like cherry pick the years or whatever.
Minimize the tax as much as possible. But yeah, we try to help people avoid that circumstance at all costs. It’s what about the grandkids? What about your future education costs? What about you yourself having continuing education? What about boards or test prep or whatever?
And a lot of times there’s just education things you’re not really thinking about.
Theresa Scheu: Yeah.
Daniel Wrenne: Anyway,
Theresa Scheu: Yes. So I think the takeaway is if you can, start as soon as you can. It doesn’t have to be a lot of money to contribute to these accounts, but the longer runway you have, the more likelihood you are to benefit from that compound growth.
Daniel Wrenne: Yeah. When in doubt, if you have kids, I would start it. I would go with set up, figure out the best 529 plan, and set it up to have automatic, ideally, it’s automatic monthly deposits. Just so it just happens and then you can tweak the number, the monthly number as you start to iron out what the goal is.
And then I don’t think that kind of—most people when they get older, they’re like, man, I’m glad I did that. Or they’re like, man, I wish I’d done that, so. That’s the kind of thing, you just gotta start early.
Theresa Scheu: Yeah.
Daniel Wrenne: So. All right. Well, Theresa, thanks for coming on and talking a little 529.
Theresa Scheu: Excellent. All right, thanks.
No guests or clients appearing on the podcast received any form of compensation for their appearance and obtained no other benefit from us. It should not be assumed that every client has had the same experience.
