What do Do With a 529 Balance?

In my previous blog post about college payment strategies, I discussed the many ways families can approach paying for college—whether through 529 plans, brokerage accounts, income, or financial aid strategies.

The goal was to create a thoughtful, tax-efficient plan to meet one of life’s biggest expenses. But what happens when that planning works out even better than expected?

Watching your child earn a college diploma is a proud moment for any parent. It also marks another milestone: no more tuition bills. After years of saving, planning, and carefully deciding how to fund education, you may now find yourself in a new position:

What happens if there’s money left over in your child’s 529 plan?

If you followed a thoughtful funding strategy—balancing 529 withdrawals, taxable accounts, and tax credits like the American Opportunity Credit—you may have preserved more of your savings than expected. That’s a good problem to have. And fortunately, 529 plans offer more flexibility than many families realize.

Here are several smart ways to make the most of those surplus education savings.

Keep Paying for School

If your newly minted graduate is pursuing an advanced degree, this is the most straightforward path. 529 funds can continue to be used tax-free for qualified expenses like tuition, fees, books, and even room and board for graduate programs.

College Payment Strategies: Where Should the Money Come From?

Everyone knows college is expensive. This year, the average tuition and fees for a private college are nearly $45,000 per year. And the price tag for some schools might be more than double that amount when factoring in the total cost of attendance with room and board.

Some families may not end up paying the full sticker price. Grants, scholarships and financial aid packages can help bring down costs, although these can be hard to get.

What is the best way to cover the cost?

Consider All Your Options

First, take stock of possible funding sources. These may include 529 college savings plans, taxable brokerage accounts, traditional savings accounts, cash from current income, gifts from family members and loans. Each comes with its own rules and tax treatment. And which sources you tap—and in what order—matters.

• 529 plan: Contributions to a 529 college savings plan grow tax-deferred. Withdrawals are tax-free when they’re used to cover qualified education expenses—anything else will likely come with an income tax hit and a 10% penalty on the earnings portion of the withdrawal. The good news is that qualified education expenses cover more than just tuition. You can use tax-free withdrawals to pay for room and board, textbooks, computers and more. One important note: 529 plans owned by parents are treated as parental assets and may reduce financial aid awards.
  
  
• Brokerage account: When you sell assets to make a withdrawal from a brokerage account, any profit is subject to capital gains tax. Long-term capital gains are taxed at preferential rates, but even so, brokerage account funds are generally less tax-efficient than 529 plans in covering education expenses. Your brokerage account balance is also factored into financial aid eligibility.
  
  
• Savings account: Interest earned on a savings account is taxed as ordinary income. Withdrawals don’t create taxable events. Like brokerage accounts, savings accounts can reduce financial aid eligibility, more so if held by the student.
  
  

What's in the One Big Beautiful Bill Act?

Congress recently passed the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, a sweeping tax and spending policy bill with lots of long-term implications. Much of the news coverage has focused on its difficult legislative path and the potential political, economic and social consequences. But like many people, you’re probably wondering what this new legislation means for you and your family.

The full answer depends on the makeup of your family and the unique details of your finances. In this blog, we will highlight a few immediate implications for financial planning worth considering.

The Key Benefit of Almost Any Tax Legislation: Certainty

On the whole, financial planning is a lot easier to do when you know what the tax code will look like in the future. With several tax provisions from previous legislation set to expire, Americans were in a position of potentially making important financial decisions with incomplete information. The passage of this bill removes much of that uncertainty.

In some cases, the bill preserves the status quo by making temporary provisions of the 2017 Tax Cuts and Jobs Act permanent. The lifetime estate and gift tax exemption was scheduled to sunset in December 2025, dropping the exemption to $6 million from nearly $14 million. Instead, that higher exemption has been made permanent and will increase next year to $15 million ($30 million for married couples).

The legislation also makes permanent the larger standard deduction—which will increase next year to $15,750 ($31,500 for married couples)—and the lower maximum mortgage interest deduction of $750,000.

Business owners can plan with the knowledge that the Section 199A deduction for qualified business income is now permanent and remains capped at 20%.

Four Tips to Prepare for Natural Disaster

In the fall of 2024, Hurricane Helene moved inland from the Gulf of Mexico as a tropical storm from Georgia to the mountains of North Carolina. In western North Carolina, the thousand-year storm caused immense damage from flooding. Even as Floridians were catching their breath, Hurricane Milton swept through shortly after. People living in areas thousands of feet in elevation and hundreds of miles from the coast were hit hard—so much heartache for so many people.

If you or your loved ones have been impacted, our hearts go out to you. Patterns of extreme weather may or may not be the new norm. It’s hard to say. Either way, life on planet Earth has long been fraught with dangers. If not hurricanes, other disasters such as tornadoes, floods or earthquakes could hit depending on where you live in the world. In the future, there may be new, formidable risks to manage. But, the truth is, risk itself is nothing new.

Some investors are interested in trying to align their portfolios with their values to achieve goals—such as lower carbon emissions—that could potentially reduce the risk of extreme weather in the future. NASA says “as carbon dioxide, methane, and other gases increase, they act as a blanket, trapping heat and warming the planet. In response, Earth’s air and ocean temperatures warm. This warming affects the water cycle, shifts weather patterns, and melts land ice — all impacts that can make extreme weather worse (https://science.nasa.gov/climate-change/extreme-weather/).”

However, to mitigate the risks, all investors should prepare their financial affairs for disaster. A few ounces of these preventive measures may forestall pounds of future strife.

1. Organize Your Financial Information

Access to financial information can be critical after a disaster, helping you work with your insurance companies, apply for disaster relief or even just keep up with your everyday bills. 

 Store important documents in a waterproof safe, a safety deposit box, or in the cloud for easy access during a disaster. Incidentally, make sure you aren’t the only person who knows where the information is.