Advisor Insights

DHJJ Financial Advisors offers insight on a variety of topics. From current market events to our perspective on timeless financial topics, you will find that our articles provide information that will help you to navigate your own financial landscape.

529 Plans: Common Questions and Answers – And Potential Tax Savings

529 Plans: Common Questions and Answers – And Potential Tax Savings

What is a 529 Plan?

These plans are named after Section 529 of the federal tax code. The 529 plans are a great vehicle to save money and let it grow tax-free. The requirements for guaranteeing the tax free growth are simple – use the money in the 529 plan for qualified education expenses.

What tax benefits and implications are there to a 529 Plan?

529 plans are a great way to accumulate wealth for future generations to use towards education and have that wealth grow income tax free and also estate tax free if used in the proper way.

A contribution to a 529 plan is considered a gift to the beneficiary of the plan. There may be gift tax reporting requirements and gift tax consequences if you give more than $14,000 to any particular beneficiary during the year.

There are limits on the amount that can be contributed into a 529 plan. These limits are generally between $300,000 and $400,000, depending on the state sponsoring the plan.

You can use any state 529 plan. You are not required to use the plan of your resident state; however there may be tax benefits if you use your resident state 529 Plan. Illinois allows for a subtraction of the contribution amount up to $20,000, if your filing status is married filing joint.

What are the “qualified education expenses?”

Qualified education expenses can be a variety of things. They include tuition, fees, book, and room and board. A beneficiary can even use them to purchase a computer so long as they are enrolled in an eligible educational institution.

Who can get a 529 Plan?

Anyone can set up a 529 plan. There are no income limitations on who qualifies to set up a 529 plan. The beneficiary can be anyone as well – a child, grandchild, relative, friend, and even yourself.

An eligible educational institution is generally any university, college, or vocational school that is attended as postsecondary education. If you are curious if your institution qualifies, there are websites that list all qualified institutions (

How DHJJ Can Help

If you have questions on how your 529 Plan impacts your taxes, please contact DHJJ at 630-420-1360, or email Cammy Corso at

Don't Forget that the 60-day IRA Rollover Rule Has...
Estate Planning: Take Advantage of Potential Valua...

Stay up to date

Sign up for our newsletter so you can have the latest
news and events delivered to your fingertips.

T: 630.420.1360
F: 630.420.1463
184 Shuman Blvd, Suite 200
Naperville, IL 60563

T: 630.377.1106
F: 630.377.2294
2560 Foxfield Rd, Suite 300
St. Charles, IL 60174

As a client of DHJJ Financial Advisors (“Company”), by selecting the “I Agree” button, I elect to participate in the password-protected access portion of Company Internet web site. I understand that my participation will allow me to review certain investment-related information published by Company and unaffiliated third parties. This password-protected access is made available to clients of Company free of charge. This authorization shall continue until canceled in writing.

I understand that the password-protected section is a secure web site intended only to allow a client access to information relative to his/her/its specific account. I also understand that I will be assigned an individual password. I agree not to share my password with any other person. I hereby release and hold Company harmless from any adverse consequences relative to any failure by me to keep the identity of my password secure.