529 Plans Aren’t Just For College — 3 Big Hidden Benefits

Hey guys, Toby Mathis here. And today we're going to be talking about a whole bunch of things that you didn't realize you could do with 529 plans that you actually can, and how they're used by successful people. In order to achieve a bunch of objectives you probably did not realize existed. So I brought in an expert, Chris Stack. First off, welcome, Chris. Thank you. Thank you for having me, Toby. Fantastic. And, Chris, this is the waters he swims in. This is what he does day in and day out. So I just said there's nobody better than somebody who that this is what they do to bring in and talk about these things. So Chris, what are the most surprising ways people use 529 plans that most folks have no idea even exist?

Well, thank you for that question. It really goes to the heart of, of what we'd like to convey here today. I think, the most surprising thing is people use it for themselves. And what I mean by that is, most people think of these 529 is the kids college savings account. Therefore they're for kids is the inference, and they're not there for individual, investors. And the benefits of 529 accrue to those individuals as owners of the account. So the most surprising way is to, look at these and say, wow, I can enjoy all these benefits. And it helps me achieve my goals as opposed to being focused on a kid, whether it be a child or grandchild, nephew, niece. What have you. So it really is, surprising when someone says, yes, I, I've used those successfully, because it reflects an understanding that the account owner benefits from participating in these type of accounts.

So a 529 plan just to somebody who's never heard of one, can you just give a two second summary of what it is? Just a yes. So it's named after the section of the Internal Revenue Code that Congress established in 1996. And Congress reacted to what states were doing. People often ask, why did states get involved with these programs? They're not involved with IRAs and other accounts. And the reason is, as I just said, Congress reacted. States were already in the business of providing programs to help people pay for future educational expenses. Most of them at the time were prepaid tuition programs where you would pay the current rate and the program would say, we will take your funds and ensure that you have enough to pay at the state university five, ten, 15 years later, whatever it is that corresponds with that young family member. So, they were, originally enacted to protect the plans so the plans didn't have to pay taxes to the IRS. And then, since that time, there have been over a dozen legislative enhancements making these more attractive and providing more benefits to the participants.

So I don't get a tax deduction for putting money in a 529 plan, but the growth in it is going to be tax free so long as it's used for certain purposes. Is that a is that accurate? That's accurate at the federal level, Toby. And if you reside in a state with no income tax, that's certainly true. But there were about 30 states that have income taxes that do provide various levels of state tax deductions for contributions. But there are three states, New Mexico, South Carolina, West Virginia, that say every dollar you put in is subtracted from your state taxable income, whether it be, $100 or $100,000 or $500,000. So, you know, and then you have states like Maine and Rhode Island that are $1,000. So it's it varies, tremendously, state by state. But the I would argue the, the primary benefit is, as you reference, it's tax free compounding earning on your earnings instead of paying taxes on your earnings.

And then what do you have to use the money for. So let's say that I put together a 529 plan. And I live in a tax free state. So I just put it together and I throw in what I have to gift it so I could put in, what, $19,000 per recipient in 2026, something like that. And I just put the money in there and then let it invest and grow. And then someday I have to use it for one of these purposes. So, you touched on a few different things in your question there. What do I have to use it for? And again, it goes to the flexibility of 520 lines. First of all, you don't have to use it at all. There's never a requirement. You take money out what you put in.

Second of all, you don't have to use it for education. The benefit from participating in this, it was designed for education. But as we just stated, we know our funds will grow free of annual taxation at the federal. And if, state laws are applicable, state level. So, I don't have to use it at all. for college for tax free withdrawal. I can start taking tax free withdrawals for private kindergarten tuition going all the way and through graduate school. When I open up an account, I put myself it's own or identify a potential future student, and I put a third name on who gets this account. When I pass away. And, I can change any of those three names any time I want without any tax class penalty or fee. But I can also change who I'm going to use it for to any family member, which includes in-laws and first cousins and adopted and foster children. So I have great flexibility

broadside, because I can use it for so many different family members that want to count and vertically as well, because I can go, not only for kindergarten through graduate school, but hold it then for the next generation or transfer, leftover money to a Roth IRA, that can be used 40 years hence. So, and of course, growing tax deferred year after year to really, build up some meaningful wealth. And so there's three parties. So I'm the owner. So let's say I set this up for my daughter, and I think I can put, what, five years of, kind of. So go ahead and explain that one. Yeah. Well, there are many different attributes and benefits. One, probably the most unique is it represents this account, this asset represents the only opportunity any of us ever have to own.

And not only do we own, but we have daily access, liquidity and control over this account. And yet it is outside our taxable estate because, you're familiar, Toby, with the fundamentals of estate planning. Quite simply, whatever you own when you die is inside your taxable estate. We go to great lengths and all strategies to address this, with the intention of giving up control and succeeding and removing it from our taxable estate. The 529 is a very simple solution because Congress provided in 1997, a year after they enacted 529, that when you fund the account, you're making a gift to that designated beneficiary, that kid. Now in that capacity, that kid never has any legal right. Claim access, entitlement to the asset can never compel a distribution. Yet the tax law says we've gifted it to them. So because it's a gift, we're subject to the gift tax rules that's currently $19,000 is the annual exclusion. And to your point, 529 has a special provision that says, hey, we'll let you use your 2026 19,000 and we'll give you a four year loan or advance on top of that for a total of five years. So five times 19 is 95.

And if I'm married and the tax code does not require you to be happily married, you can do twice that amount for $190,000 for one afternoon into one 529 account. But that's not the end of it, because most plans allow you to contribute until the net asset value reaches, over half $1 million. And so, I'm able to use the other credit known as Unified Lifetime Gift Tax Exemption, to supplement that. If I want to put 500,000 in, and I've used the five year forward gifting for a total of 190, my spouse and I, I can put in 310. And I do that by carving out $155,000 and my spouse 155,000, which totals 310 together with the 190 is 500,000. I've reallocated to this tax deferred investment account that is now growing outside my taxable estate, that I have an option but no obligation to use free of taxation for education purposes. For any family member starting kindergarten, going to graduate school. And then so let's say I set this up for a family member. I guess this will be a two part question. First question is, can I switch that person out and just choose a different family member? And does it have to be a family member? And then the other part is what happens when it when you die is there's a different party that receives it? The answer to the first question is, when I set up the account, it could be any individual related or unrelated. It's just that when I change, it has to be to a family member of that person, not of me.

So if I just for some reason, decide I want to fund an account for the Starbucks barista, if I want to change the designated beneficiary whom she would be, it would have to be to a member of her family, not mine. And so, you know, I don't know everyone's particular situation, but we'll presume for this discussion. They're not related. So, so I can change it daily or without any tax cost penalty or fee to another family member of the beneficiary. And you had a second question. Yeah. When you pass, does it have to go then to that baristas family or any of those designated. Oh no, somebody else could go to my living trust. Could it go to a third party? Completely unrelated, three different, three different names, three different identities. No requirement that the any of them be related to each other. And so the third name, the transfer of death, we call it successor owner. Every other type of account, we call it beneficiary. But the tax code called the potential future student designated beneficiary. So we use a different term called successor owner. And so, the account gets transferred without any tax cause, penalty or fee upon my death as owner to that successor owner, that successor owner can be here, related person or not. It could be my living trust. It could be an LLC. It could be, any entity with a tax ID number. And so, whatever my, estate planning, legacy planning may involve, should be reflected in that decision. Who identify as the transfer of death on that account. Well, let's go over this real quick because some people may be going way, way. Wait a second. Are you telling me that I can make a gift? So let's say I'm married and my spouse and I each make a gift. We could do $19,000 a year each, so whatever that is, $38,000 a year. We can turbocharge it and make it. What would that be? 100 and, 190,000. Yeah. And it's after no gift tax returns filed. No, nothing. It's now in this vehicle, this 529 plan for somebody outside my family. It's not included back in my estate. And then I can pick a different designee if I, if I brought it, if I made my living trust, for example, the beneficiary if I passed and I never spent the money on education, and it's grown like, let's just say that it's doing what the stock market's been doing in the last ten years, and that 190,000 is now 700,000. Would I be bringing it back into my estate for tax purposes if I made my living trust the beneficiary or what I could I just give it to a future generation and avoid having it included in my. We have these huge estate tax brackets now at 15,000 or 15 million single. I think it's 30 million right above. And for inflation it's going to keep getting bigger. But do I need to be worried about that getting brought back into my estate if my intent is to get it out of my estate? No, you don't need to worry about that. So and in terminology is very important. Again, beneficiary in 529 land means the potential future student doesn't mean the third name who gets the asset when I pass. And so the successor owner, could be my living trust. And so upon my death, it then becomes my revocable trust. So it's never been in my state. And so, I've avoided the estate. And as you point out, the estate tax threshold is, at a level that's unprecedented. It's extremely high. But that's where we're at currently. And, you know, the estate tax, is very resilient.

And despite pledges and intentions to eliminate it still remain standing. And, you know, when the political pendulum swings the other way and it will it is a good candidate to be brought down to more widely applicable levels. But should that happen, the five 2090 count retains its character, and that would be excluded from that taxable estate as it is. For the dozen or so states that have their own, estate tax, the state of Washington has no income tax, but it has a very aggressive estate tax, such as the state of Maryland as well. So there are a number of states that, you can benefit with one stop shopping. 529 avoiding, annual income taxation and avoiding the transfer estate tax. I also want to point out another quirky thing about 529 is we're talking about the owner passing and the asset moving to, the designated, person or entity. I don't have to wait until I pass because I'm able to transfer ownership without any tax penalty or fee during my lifetime. So, if that's the case now, we see that not infrequently when a grandparent sets up an account that grandchild reaches the age of matriculation, and they say, to their financial advisor, for example, I don't want to be involved in this exercise of paying tuition and figuring out when and how much is due. Can I transfer the account with that responsibility to my son, the grandparents parent? And the answer is yes. By simply, executing a half a page form, you've succeeded doing that again without any tax cuts, penalty or fee. But there may be other situations where that action is warranted. So flexibility is the rule, not the exception with these, which is counter to, their pervasive way of thinking out there. That's really interesting. You just gave a good scenario. I was thinking we could go through a few scenarios so people really see how this works. But in this particular case, you said, hey, it's the grandparents. They set it up and they want to make sure that, hey, it's going to be for their grandkids, I assume, and then you, but they don't want to be involved in the management of it or in the decision making. So they transfer to the ownership of it to their children now. And I'm assuming that maybe the kids were the beneficiaries when they set it up. Or in your example, the grandkids either. Either one, it doesn't matter because we have ownership of the 529 plan and then the education beneficiary, there's probably I'm probably hatching that term. That's right. And then you have the successor owner. So you're transferring it to the to your child. Can they do anything they want with that money. Could they just take it, say, hey, you know what, I just want the money. Yes, they could because they're the owner. And these accounts have daily access to and control. And so if you're putting on $100 a month, people are not going to get too worked up about what happens. That account should I pass. If you're going to fund that account, half $1 million and it grows to a million or more over time, you do care. And that's when you have to consider naming your trust as the transfer. And the successor owner, and providing guidance to that trustee how you want these funds distributed to do under what conditions and so forth. And you don't want to be subject to the discretion of the individual, offspring that, otherwise could be identified as owner of the account. So, so there every situation is different. And 529 provides the flexibility to accommodate those different situations. Yeah. So if I set up a plan, then I can take the money out.

I assume there's penalties and tax if I, if I take if I put $100,000 into a plan, me and my spouse for my daughter, let's just say. And then one day I say, you know what? I really like that money. There's 250,000 in it. I need to build a an addition to the house and I pull that out. I assume there's a tax consequence to a portion of it. Well, these were designed for education and they're tax free when used for education or related purpose purposes. And so, but because I have complete control at all times, I can use it for anything I want. And I, am responsible for contributing the tax treatment. The program doesn't do that. So going back to your original example, $100,000, let's say in just half a dozen years or so, I want to use these funds to help my daughter start a business or my son purchase, put a down payment on a condo. And the net asset value at that time is $150,000. And now I want to take 30,000. I direct the program to do it. The next day that, that distribution is, is executed. And the following January, a 1099 Q is distributed, reflecting the principal component and the earnings component that's calculated by the program on a pro-rata basis. In our example, 100 grew to 150. We took out 30 that 1099 Q is going to say 20 was principal, which would be a tax free return of our contribution and $10,000 for earnings. But $10,000 earnings is subject to an additional tax penalty of 10%. That would be $1,000 to 10,000 earnings also subject taxes at ordinary rates. Given it's a tax deferred vehicle at the rate of the recipient. Well, I, I own this accounting. I'm a successful individual. I'm in a high tax bracket, but I know I'm going to use this to help my daughter start the business. So I had the program send the check to her, and she's only out of school year two. She's making little over 50,000. She's in the 12% bracket. She gets the check. She gets to 1099 Q she gets a tax liability. So 12% times the 10,000 earnings would be 1200. And with that $1,000 penalty would be 2200. So two things happened in this scenario. One is the owner of the account. This 529 investment account took 30,000 of my money from the account, did not use a penny for education. I transferred the liability to a lower bracket. I also transferred the liability away from me. And so where I end up is 30,000 of my money came out of my file 49 not a penny used for education. I paid zero in tax. So if that's my worst case scenario, I can live with that. I'll point out also that 10% additional tax penalty on the earnings is waived in the case of death, disability or scholarship of the beneficiary. So there are circumstances that allow me to avoid that penalty as well. And you said scholarship. So if they received a scholarship from the school and you're just going to give them the money now to use for something else that they could avoid it? Well, that's one option. I can just keep it in my account without taking any action. So, I have always have options with 529. One important option that we have is to apply qualifying funds

left over in the 529 to fund a Roth IRA for that designated beneficiary. So, the account that's been around for 15 years and money's been in it for five, I can start using without any tax or penalty or income limits applicable the fund, the Roth IRA of that designated beneficiary. So if I choose this over the. Yeah. I'm sorry. Is there a limit to that. Is there a dollar limit of how much I could. Yes. It's there's an aggregate limit of $35,000. And it is a source to make the annual contribution, which, for 2026 is $7,500 for those under, 30. Those under 59. So in in, in a going back to your example, we gave $30,000 to a daughter and she paid tax on a portion or as 10% penalty of 1012, $1,200 of the federal tax. So. But she got $30,000 for 2200 bucks. You had it outside your state. You. But again, these things are growing tax in theory I guess would be tax deferred. But that's not a bad tax hit. I'm like, why aren't people using this more often? If the other benefit, we have to mention is the fact that the federal bankruptcy code says

if your funds have been invested two years or longer, it's outside the reach of bankruptcy creditors and sometimes a state law that, governs these plans, a state that sets up the plan that law governs the plan, often provides for various measures of, asset protection from creditors and garnishments and liens and so forth. So it is a great value, overlooked value, applicable to so many. And sometimes I joke it's only applicable to people who are parents or grandparents who don't like paying taxes and are going to die. One day. I got to say this. There's got to be a catch, right? They don't let you just invest it yourself in anything. Is there are there limitations on what they can invest in? Are these things are there lots of fees or costs associated with these? Or can I just very easily set one up and then do what I want inside it? So the states are the trustees and us, such they, kind of like 41K trustees. Responsible for overseeing these plans and said for the menu of investment choices, those menus have evolved tremendously over time. Originally they were just, portfolios that simply moved with the age of the designated beneficiary. They're still available. That's kind of, off the shelf, that many people participate in directly. And now there are menus of different asset classes of individual fund and ETF options. Typically, if I wanted to dump all my money into technology, I could do that emerging markets, I could do that. Or perhaps real estate, fund. In addition to the more traditional categories large cap growth, large cap value, international, so forth and so on. So, as well as stable value and FDIC insured options. So I have more flexibility than I did in years past. And because these are pools of money under control, the state, ensures that the cost is low. When they first came out, had no assets. It was the administrative costs were quite burdensome. So low asset plan. We have, about $550 billion in these plans nationally. And so, they've reached the threshold where they are a very attractive costs, sometimes, you know, as low as 13 basis points all in. And so, you know, you can find more expensive and better performing options, right? You and I both know low cost doesn't mean net return, but, but it is, you're you are. I think it's important to note, operating in the universe of investment choices. Investment choices have risk. And rewards. These are not guaranteed savings unless you, for a specific, option that provides that. So, you know, the one catch that I will, point out in response to your question. And that's it. So different states have different kind of costs and different things. Like you could avail yourself to a low cost, low administrative costs state, perhaps. Or do you have to stick into a particular state if you live there? Yeah. There's the great majority of plans do not have residency requirements. If I want to invest in Hawaii's plan or or, Georgia's plan, I could do that. You know, Nevada, has a plan that's, distributed through Vanguard. But then the State of New York plan also uses Vanguard, exclusively. And that's actually a lower cost than in Nevada plan. Again, because it's larger size. So it's pretty much the same thing, but a lower cost. So you want to be mindful, you know, you do have plenty of choices and then there are about 30 plans that are available through financial advisors. And so, you know, if you're, accustomed to having a financial advisor handling your investments, and this is an investment, they certainly have, a number of good, options to work with as well. Often people get caught up in the state tax deduction that we touched on earlier in our discussion. And often that's the tail wagging the dog. If I'm going to put a large lump sum to work. But my tax deduction is 5 or 10,000 like it is in New York. I don't want that tail wagging the dog. A mindful of the savings that it can provide. But often a large principal contribution with better performance will make up for that, tax deduction savings in one year. And so. And if I'm going to invest for five, ten, 15 years or longer, especially given the Roth, transfer, I need to, put that in its proper perspective. So I have lots of choices. There's a lot of options. And, you know, but I think participating in the worst plan is participating in on, is there, I kind of want to do two things here. I want to go over a few examples, but I also want to give your role and how you work in these things. So if you're not a financial advisor, this isn't something where you're like, hey, come here, open up a 529 plan. This is you're an expert in 529 plans. Do you work with financial advisors or what role do you play when you work with like, not directly. I work with plans and plan managers to educate the public and financial advisors on 529 plans. I don't get paid on, on transactions that my principal objective is to distribute information like we're doing right here, right now. And so, you know, I'm really not, you know, I'm somewhat indifferent, you know, as to which plans get used. People always ask me what's the best plan, and I kiddingly will say, or whoever's paying me to speak has the best plan, but, you know, as I said earlier, participating in a plan, and you can transfer, you can roll over from one plan to another, certainly at the federal level, without any tax cuts, penalty or fee. Most of the states say, well, if you're going to leave our plan, give, give us back the tax deduction you took as a resident taxpayer. Many folks, you know, maybe that lived in Idaho and funded the whole plan, took a tax deduction and then moved to Nevada or no longer filing in Idaho. And so they can move to the Nevada plant. They thought that was, more to their liking without tax consequence inadvertently. So there are all sorts of different considerations. California will not allow you to, use the 529 to pay for K through 12 tuition. So I work with advisors and their clients and say, yeah, but there's a grandparent in Arizona. And if you transfer ownership without any tax cuts, penalty or fees, let them take the tax free distribution and pay that K through 12 tuition tax free. So they're that's the type of thing I do. I worked with people to take full advantage of 529 plan. So don't understand why states denied. But the federal government has made available. But that's politics. And so I don't want to get into that because I'm not qualified for that. You just casually put out a workaround that would save somebody quite a bit of money, especially in a state like California, where the taxes can be so high. What a huge difference. You just mentioned K through 12. You can use it K through 12. Higher education can use it for trade schools and things like that. Or is there a restriction on what type of education it is so generous and the potential applications for tax free withdrawals. So to be sure, the traditional bachelor programs, are covered in-state at a state. Doesn't matter. There are nearly 500 institutions outside the United States that are identified by the US Department of Education as eligible institutions that I can use FY 29 tax free to attend. And that does not include the thousands more that I go through my own state university setting up a study abroad program for and I and I pay my own university, for that, which is really the key, when providing evidence of tax free distributions, there are vocational schools. Trade schools recently added were apprenticeship programs are now credential programs. So if I wanted to get my CFA or CFP, I could cover those expenses tax free with my 529, accounts. So and most expenses at most schools, you know, tuition, room and board, books, supplies, fees, equipment required for attendance, laptops, printers, so forth and so on. The two major expenses not covered transportation. If I live in California and I'm going to college in Washington, DC, the cost of getting back and forth, or if I live in San Diego and going to school in Sacramento, the cost of getting back and forth is not covered. The other major expense students complain about not being prepared for when they get to college is the cost to be here. They find they're spending a lot of money on beer. Just simply weren't prepared for. There's no mention of beer in the tax code, so they're on their own for that.

Geez. Can you do this? Because I could ask you a million questions in scenarios, but could you give us, like, three basic scenarios of how people use these successfully? So if somebody's sitting out there listening, they go, oh, I, I relate to that one, right? Yeah. I mean, you could break it down into three groups. You could say, well, the traditional this is what Congress had in mind. The young families that are working hard and trying to provide for their children, open up an account. You know, because the primary benefit is tax free, compounding the three components of tax free compounding or amount, rate of return and time. Time might be the one we have the most control over. So you want to start as early as possible. Much that grow just like we have with our own individual retirement accounts, benefiting from tax free compounding. And of course, the, young parents can also call on their grandparents, to contribute to those accounts or others. And you see programs where instead of a birthday present buying a toy, how about making a contribution to the 529 account? So, that's valuable. And sometimes that's kind of what the state tax deduction is geared for, to really provide more immediate benefit, to those who are, you know, who whose budgets might be tighter than others, the next group would be more of advanced, you know, maybe we're done paying the tuition. Maybe we're looking at our grandchildren and where our own retirement is set. It's safe and secure. We're thinking about our legacy, and we say we want to do this. this in play. I want to show you my 529 beneficiary that just walked into the room here. So this is, someone who's interested in checking in. Okay, I'm going to finish talking to this man, and I'll come see you. Okay? I'll be right there. So there you have it. That was not, that was not planned. And so, that there's a real life, beneficiary. Now, unfortunately, the flexibility that I enjoy is owner. It's been curtailed. He heard me go online and recorded, line and say that I would be handling that, so. But, you know, that's okay. So that's me. That's the one. I'm just talking about the legacy. I, you know what's most important to me after my own retirement? And you can switch, by the way, like, I just. I don't mean to interrupt you, but you could switch. So if you have a grandson and I don't like this much, and, well, you can do that. Or if there's a future generation, if that grandson grows up and has a grandson and you want to switch it to a great and that goes back to earlier comment about naming a trust as owner and providing, and that ties into the third group, the, the high net worth to have wealth that were survived multiple generations. And so, that is, capitalizing on the fact that there's no required minimum distribution, no requirement. The accounts closed. Having a trust as owner of this, those, successful families are often subject to high tax rates, are subject to an estate tax, even at the current levels. And this provides relief from that. And, you know, they're used to the more traditional planning exercises and vehicles and, you know, dismissed. The 529 is a kid's college savings account, and they're the ones missing out, because the benefits really, could be enjoyed by them. But Congress is mindful that this is really for more traditional middle class families. We don't see enough usage. There are about 16, 17 million accounts currently. But there's a long way to go to get more participation. We have $1. 7 trillion of outstanding student debt. And as I mentioned earlier, over 500 billion in FY 29 assets. Until that gets flipped, I don't expect to see any movement to the town. The benefits and the applicability of FY 29. So let's say that I set up a 529 plan, and it originally was for a daughter. She didn't need it or we didn't use it all and it continued to grow. Somebody else. Could somebody else contribute to that same plan? By the way, could somebody else donate it? Yeah yeah, yeah. But I'm the plate owner, right? Yeah. And so that's not, unlike me putting money in your checking account because I contribute to the plan, I may think that I'm doing it for the benefit of that, young, you know, child, but the reality is the owner has full control. And so, you know, I think I'd rather open up my own account if I were going to make more than one contribution, to ensure to choose how I want. What happens if something happens to a beneficiary? If a child passes and there's money in a 529 and they were the, beneficiary of the education component. Well, you know, I could, change the beneficiary. You know, the family member that deceased, I could take a distribution. You know, I have, any number of, of of options, that should that, beneficiary pass, but, go ahead. If a living trust owns the 529 plan, if I ended up, you know, that was, hey, when I pass, it goes to my living trust and the living trust, then that trustee would be selecting the education beneficiary or beneficiaries of that plan in the future. Would there ever be a time when it has to spend the money, or could it just continue to grow in there? And it's there for the education of those beneficiaries. But if the money's growing faster than it's being spent, it would just continue to compound. Yeah. I mean, keep in mind that the requirement is that the account have a designated beneficiary identified. So if the one were to pass, you'd have to put a new family member on there, otherwise close the account because that's what it's designed for. So, you know, and again, in the case of the death of the beneficiary, the moneys can be removed without penalty because that's one of the penalty exceptions. Oh, wow. Okay, there we go. But if I wanted to keep it in there, I could just name a future beneficiary. So let's say a beneficiary passed. But there's other children or other grandchildren. Could I just switch the beneficiary to one of them. Yeah, you can do that. The owners account owners discretion or any point in time it in is there any time limitation on these then I could you just keep that in. That is not imposed by 5 to 9 of the tax law. There are time limitations and sometimes imposed by state law, like the Commonwealth of Virginia has a statutory, time limitation. So you need to be mindful of that. But, 5 to 9 of the Internal Revenue Code does not. Yeah. I was just thinking for folks that are very, education heavy, like they're, they're setting up their trusts and they want to create education opportunities for their future generations. That perhaps the way to do it isn't just in the living trust by itself, but in conjunction with the 529 plan. Is that something you see when there's grandparents that are of significant means and they have multiple grandchildren, maybe even some great grandchildren and other children, where they set up plans for each one so they can gift 19,000 per person, perfect grandma and grandpa. So they're doubling it up. When they set these up. They can do a five year prepay. So they're getting that turbo like you mentioned. But you could just be doing that for let's say you had ten grandkids you could be giving away in theory was that 1. 9 million in year one without having to file a tax form, without it being included in your estate. Well, you know, anytime you gift more than the annual exclusion, you are obligated to file a 709. But there is a box to simply check in the case of five year forward gifting, or 529 right on that 7 or 9. So no taxes do. It's just an informative return that your father. Yeah. And yeah, the trust and that kind of situation you've outlined, the trust would be an appropriate successor owner because you may not feel comfortable empowering an individual with, control over those assets, that of Rome, over time. And, you know, when you compare the trust owning the 529 with the trust, owning other assets, it's only going to take $16,000 in annual income for that trust to be pushed into the highest federal tax bracket, 37% plus a 3. 8%, that investment income tax. And if the trust is, not ideally set up and subject to state income tax, you know, it's also going to find itself, you know, paying in the neighborhood of 50% of its annual earnings and an income tax. And so, 529, avoids all that. And, you know, it, side by side with other trust assets really looks quite attractive. Yeah. I was just thinking the same exact thing. I was like, that seems kind of an ingenious way. If that's one of your goals, if you're one of those people out there that's thinking, hey, how do I create education for my family? This is something that should be part of that plan. It seems. Is there anything else that we're missing as far as a secret use of the 529 plan that somebody should be aware of? Well, I think you know. There's. I go back where I started. There's a fundamental misunderstanding. Misconception.

People don't want to fund a lot of money into their kids college savings accounts. They often ask, can I get the money back if I need it and when post, when that question is posed to me, I always say no, you can't get it back because before you can get it back, it has to leave you. And so the fundamental thinking about these is, is there? It's you what do you mean get it back? Do you set about your checking account? It's just reflects a lack of awareness and understanding. And I think once you get past that, then you're comfortable and enjoying the benefits and recognizing that the benefits accrue to the account over not to the, kid, not to the designated beneficiary. And so, you know, I'm, I now have the option with my 529 account to deal with that kid's future education expense. If I choose, if I choose it, the, if it's needed, I can afford to. And I want to. Those are the three factors at that point in time. But I always know I'm going to start with more after years of tax free compounding. And, and I'll enjoy that benefit. So, you know, I think the secret is getting to it and starting and overcoming this misconception. These are the kids college savings accounts and, you know, taking full advantage of what's being offered. So you are in full control. You can change the beneficiaries if you want the money. It never really left it for tax purposes, for gift tax purposes, you made a gift, but if you needed the money back, you could get the money back and continue to utilize it. Or more likely than not, you're going to be using it for something else, for some of those beneficiaries or for somebody else. And which case you could switch them to be the beneficiary and issue the money to them. And then any toxic tax consequences are borne by them at their tax rate, which should be significantly lower than yourself. If you were making significant money and you're worried about that, is that a fair statement? I think that's a pretty good summary. Yes. And, you know, you don't need, you 529 to learn from this, video. So, you know, it's, an educational experience that hopefully, people will, will act upon. Well, Chris, I really appreciate it. What I do is I will put your contact information if you provide it in the show notes in case somebody does need to reach out. I don't know if that's appropriate or not. But I can put it in there in case there's, financial planner or somebody out there working with clients that maybe they, they want to bring you in to speak. And, and if, if you want out there, if you're listening to this, you can put some comments in. What I'll do is I'll have my team look, and if I can get an answer from Chris, that'd be great. If not, I know you work with Jill, one of my financial advisors as well, and she's fantastic and I can always run those through her as well. To make sure that if there's questions out there that we get people answers. So, Chris, I really appreciate you coming on and sharing. Is there anything else you want to hit on before we say, goodbye? No. 529 has been around since 96. We're still learning about them. And, I very comfortable saying they're only going to get better. There are more, enhancements in the works. And, when you look at, how far they've come in the past, we're hopeful that, that trend will continue. But, you can't benefit unless you participate. So, that I'll close with that. Well-Said. Thank you, sir. Okay. Thank you very much.