Happy 5/29: The College Account That Quietly Became a Lifelong Planning Tool | Ben Rosbach
- Ben Rosbach
- 19 hours ago
- 4 min read
Happy 5/29: The College Account That Quietly Became a Lifelong Planning Tool
By: Ben Rosbach
Happy 529 Day to all who celebrate! Every May 29th (5/29), those of us in the planning world get a little excited about a date most people scroll right past. It's a nod to one of the most flexible, underappreciated tax-advantaged accounts in the code, and this year the timing is especially good: the 529 you think you know just got a meaningful upgrade.
If your mental picture of a 529 is "the thing you open when the baby comes home and forget about until senior year," it's worth a fresh look. The account has had significant changes.
The basics, quickly
A 529 is a state-sponsored education savings account, and here's the heart of it: everything you contribute grows 100% tax-free, as long as the money is used for education expenses. The account owner, not the beneficiary, keeps control the whole time, deciding when money comes out and changing the beneficiary to another qualifying family member whenever life changes. That control is the part most people underestimate.
The move worth knowing: 529 superfunding
A favorite with grandparents and business owners who've had a strong year. The tax code lets you "superfund" a 529 by front-loading five years of gifts into a single year. In 2026 that's up to $95,000 from one person, or $190,000 from a couple, contributed at once without triggering gift tax, as long as you make the five-year election. For anyone with lumpy income looking to deploy a windfall efficiently, it's elegant.
What's new for 2026, and why it changes the conversation
This is what makes this year's 5/29 different. Recent federal legislation expanded what a 529 can pay for:
K-12 just got bigger. The annual limit for K-12 expenses doubles from $10,000 to $20,000 per beneficiary in 2026. And it's no longer tuition-only. Qualified K-12 costs now include curriculum and materials, books, online learning, certain tutoring, standardized and AP test fees, dual-enrollment fees, and educational therapies for students with disabilities.
The 529 is now a credentialing account. This is the headline most people haven't heard. As of mid-2025, you can use 529 funds tax-free for recognized postsecondary credential programs: professional licenses, technical certifications, apprenticeships, and the continuing education required to maintain a credential, covering tuition, fees, exams, books, and supplies.
Sit with that for a second. A 529 is no longer just a "will my kid go to college" bet. It's a vehicle for trade certifications, professional licensing, career changes, and ongoing CE for licensed professionals. If you work in a licensed field, or you're saving for a kid who might not take the four-year path, the account just became far more useful and far less of a gamble.
"But what if they don't use it?"
The most common reason people hesitate, and the answers keep getting better.
You can always change the beneficiary to another family member: a sibling, a cousin, yourself. If money is still left over, there's now a tax-free off-ramp into retirement: a 529-to-Roth IRA rollover, up to $35,000 over the beneficiary's lifetime. The 529 must have been open 15+ years in the name of the beneficiary, and the dollars rolled must have sat at least 5 years. Each year's rollover is capped at the annual Roth limit ($7,500 in 2026), and the beneficiary needs matching earned income. Even so, it turns "trapped" savings into a retirement head start.
The California asterisk
Because I plan for California families, this matters. California offers no state income tax deduction for 529 contributions, so here the benefit is purely the tax-free growth, not an upfront write-off. California also doesn't follow the federal K-12 rules: a withdrawal for K-12 tuition that's tax-free federally may still be treated as non-qualified for California state tax purposes.
The takeaway for 5/29
The 529 has quietly become one of the most flexible accounts available: a college fund, a private-school resource, a credentialing account, and a Roth on-ramp, all in one.
Consider 5/29 day as your annual nudge. Whether you're a business owner deciding what to do with a strong year, a parent wondering if it's too late to start, or someone who opened an account a decade ago and hasn't looked since, these accounts are a group opportunity to take advantage of.
Gerber Kawasaki Wealth & Investment Management is an investment advisor located in California. Gerber Kawasaki Wealth & Investment Management is registered with the Securities and Exchange Commission (SEC). Registration of an investment advisor does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Gerber Kawasaki only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Gerber Kawasaki Wealth & Investment Management 's current written disclosure brochure filed with the SEC which discusses, among other things, Gerber Kawasaki Wealth & Investment Management's business practices, services and fees, is available through the SEC's website at: http://www.adviserinfo.sec.gov .
Ben Rosbach is a Financial Advisor of Santa Monica, California-based Gerber Kawasaki Inc., an SEC-registered investment firm with approximately ~$4.02B billion in assets under management and assets under advisement as of 12/31/25. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss. Readers shouldn't buy any investment without doing their research to determine if the investments are suitable for their situation. “All investments involve risk and one should consult a financial advisor before making any investments. Past performance is not indicative of future results."
