Millionaire Librarian

We funded our 529 early—even before our daughter was born. My father-in-law vowed to contribute half of her college costs through his own 529, which left us with about $10,000 to contribute. Our portion should grow to around $55,000 by the time she starts college.

We were living in Oklahoma at the time, which had an expensive 529 plan, so we forwent the state benefits and used Fidelity to open an account through their UNIQUE plan. Currently, the money is fully invested in their total US market index fund.

One significant benefit, beyond tax-free growth for education, is a recent change under the SECURE 2.0 Act. This law now allows for a portion of unused 529 funds to be rolled over into a Roth IRA for the beneficiary, subject to a $35,000 lifetime limit and specific eligibility rules. This helps alleviate the fears of parents who worry about overfunding a 529. Additionally, if our daughter does not use the full amount, we can change the beneficiary to another member of the family—such as siblings, cousins, or even ourselves—without incurring tax penalties.

This multi-layered flexibility transforms the 529 from a restrictive “use-it-or-lose-it” education fund into a powerful, long-term generational wealth tool, allowing us to invest aggressively without the fear of being penalized for our daughter’s success or alternative life choices.