--- title: Want to Save for Education Expenses? Open up a 529 Plan Account. description: Looking for a way to save for education expenses and achieve tax benefits? Why opening a 529 Plan Account may be your best option. image: https://blog.acgworldwide.com/hubfs/Blog%20Photos/529.png --- [![acg-logo-header.png](https://blog.acgworldwide.com/hs-fs/hubfs/acg-logo-header.png?width=123&name=acg-logo-header.png "acg-logo-header.png")](http://www.acgworldwide.com/) - [Who We Are](http://www.acgworldwide.com/about-acg/) - [Selected Staff Bios](http://www.acgworldwide.com/selected-staff-bios/) - [Culture and Philosophy](http://www.acgworldwide.com/culture-and-philosophy/) - [Advisory Board Members](http://www.acgworldwide.com/advisory-board-members/) - [What We Do](http://www.acgworldwide.com/our-services/) - [Wealth Management](http://www.acgworldwide.com/wealth-management/) - [Investment Advisory](http://www.acgworldwide.com/investment-advisory-services/) - [Third Party Administration](http://www.acgworldwide.com/third-party-administration/) - [Retirement Plan Consulting](http://www.acgworldwide.com/401k/) - [Financial Planning Services](http://www.acgworldwide.com/financial-planning-services/) - [Tax Strategies](http://www.acgworldwide.com/tax-strategies/) - [Who We Help](http://www.acgworldwide.com/our-clients/) - [Businesses](http://www.acgworldwide.com/businesses/) - [Entrepreneurs](http://www.acgworldwide.com/entrepreneurs/) - [Individuals and Families](http://www.acgworldwide.com/successful-individuals-and-families/) - [Foundations and Endowments](http://www.acgworldwide.com/foundations-and-endowments/) - [Press & Resources](http://www.acgworldwide.com/acg-live/) - [Blog](http://www.acgworldwide.com/blog/) - [Company News](http://www.acgworldwide.com/company-news/) - [CBS 6 News Market Briefs](http://www.acgworldwide.com/company-news/bill-fitzgerald-of-cbs-6-news-interviews-with-sandy-wiggins/) - [Monthly Investor Insights](https://blog.acgworldwide.com/topic/monthly-insights) - [Quarterly Commentary](http://www.acgworldwide.com/commentary/) - [Cost of Living Adjustments](http://www.acgworldwide.com/colas-and-limits/) - [Important Disclosures](http://www.acgworldwide.com/acg-live/website-disclosure/) - [Contact Us](http://www.acgworldwide.com/contact-us/) [![Richmond Virginia](https://blog.acgworldwide.com/hs-fs/hubfs/ACG_June2016/images/ACGLogo_KOHi.png?width=280&height=112&name=ACGLogo_KOHi.png "Richmond Virginia")](http://www.acgworldwide.com/) ![529.png](https://blog.acgworldwide.com/hs-fs/hubfs/Blog%20Photos/529.png?width=830&name=529.png "529.png") # ACG Blog # Want to Save for Education Expenses? Open up a 529 Plan Account. By Jimmy Pickert, CFA®, CFP®, CRPS® - [Tweet](https://twitter.com/share) ![Jimmy Pickert, CFA®, CFP®, CRPS®](https://blog.acgworldwide.com/hubfs/Jimmy_Photo19.jpg) Jimmy Pickert, CFA, CRPS® Portfolio Manager Opening up a 529 Plan is the best way to save for education expenses. In addition to providing a great means by which one can save for the ever-increasing costs of education, there are current and future tax benefits to enjoy. College related expenses—particularly tuition—have risen at a much higher rate than normal inflation. In the past decade, the average increase has been 5 percent annually. If we assume that these expenses continue to rise at their current rate, the following *annual* cost can be expected in 18 years:  - Public in-state: $60,863 - Public out-of-state: $98,527 - Private: $122,497  This means that the average total cost of a four-year degree starting in 18 years is forecasted to be between $240,000 and $490,000. Such high expenses may be daunting, even for families who are otherwise financially secure. Saving early is critical because the compounding effects of investment returns and tax incentives will substantially lessen the overall bill. ## **Tax Incentives**  ![529 graph](https://blog.acgworldwide.com/hs-fs/hubfs/529%20graph.png?width=503&name=529%20graph.png)One great tax incentive of a 529 plan is that investment income and gains are not subject to taxes. This may not mean much in any given year, but over 10-20 years it results in plenty of savings. An example is shown in the chart to the right. $100,000 is invested in both a tax-free account (like a 529 plan) and a taxable account. Each account gets an average return of five percent per year, but the taxable account has 20 percent of its gains taxed each year. After 18 years, the tax-free account has grown by over $38,000 more than the taxable account.  In addition to those compounding tax benefits, there are income and estate tax benefits to be enjoyed by contributing to a 529 plan. While contributions are not deductible for federal income tax purposes, Virginia allows up to $4,000 in 529 contributions to be deducted from state income tax returns each year. If more than $4,000 is contributed in a given year, the excess amount may be carried forward for deduction in future years. For a husband and wife filing jointly, the maximum amount deductible each year is doubled.  Contributing to 529 plans is also a good way for high net worth families to reduce estate and gift taxes while transferring wealth from one generation to the next through the use of the gift tax exclusion. This exclusion allows a person to give up to $15,000 per year, or $75,000 over a five-year period, without their gift being subject to the gift tax. The exclusion limit is determined on a per recipient basis, not a per giver basis. Please note that Virginia’s 529 Program accepts contributions until all account balances for the same beneficiary reach $500,000. [![Talk to a Financial Advisor](https://no-cache.hubspot.com/cta/default/2254275/0d15d192-9771-4466-9c75-26ce83d4bf1a.png)](https://cta-redirect.hubspot.com/cta/redirect/2254275/0d15d192-9771-4466-9c75-26ce83d4bf1a) — Posted on September 12, 2018 by [Jimmy Pickert, CFA®, CFP®, CRPS®](https://blog.acgworldwide.com/author/jimmy-pickert-cfa-crps) [Jimmy Pickert, CFA®, CFP®, CRPS®](https://blog.acgworldwide.com/author/jimmy-pickert-cfa-crps) — Topics: [Investments](https://blog.acgworldwide.com/topic/investments), [Financial Planning](https://blog.acgworldwide.com/topic/financial-planning) ### Subscribe to Email Updates ### Posts by Topic - [401(k) (105)](https://blog.acgworldwide.com/topic/401k) - [Retirement (105)](https://blog.acgworldwide.com/topic/retirement) - [Monthly Insights (80)](https://blog.acgworldwide.com/topic/monthly-insights) - [Financial Planning (62)](https://blog.acgworldwide.com/topic/financial-planning) - [Investments (50)](https://blog.acgworldwide.com/topic/investments) - [Wealth Management (37)](https://blog.acgworldwide.com/topic/wealth-management) - [Market Performance (28)](https://blog.acgworldwide.com/topic/market-performance) - [defined contribution (21)](https://blog.acgworldwide.com/topic/defined-contribution) - [Tax Strategy (16)](https://blog.acgworldwide.com/topic/tax-strategy) - [defined benefit (16)](https://blog.acgworldwide.com/topic/defined-benefit) - [retirement plan (10)](https://blog.acgworldwide.com/topic/retirement-plan) - [Compilation (9)](https://blog.acgworldwide.com/topic/compilation) - [covid-19 (6)](https://blog.acgworldwide.com/topic/covid-19) - [qualified plan (6)](https://blog.acgworldwide.com/topic/qualified-plan) - [Asset Allocation (5)](https://blog.acgworldwide.com/topic/asset-allocation) - [distribution planning (5)](https://blog.acgworldwide.com/topic/distribution-planning) - [irs (5)](https://blog.acgworldwide.com/topic/irs) - [Third Party Administration (4)](https://blog.acgworldwide.com/topic/third-party-administration) - [participant loan (4)](https://blog.acgworldwide.com/topic/participant-loan) - [pbgc (4)](https://blog.acgworldwide.com/topic/pbgc) - [secure act (4)](https://blog.acgworldwide.com/topic/secure-act) - [TPA (3)](https://blog.acgworldwide.com/topic/tpa) - [defined benefit funding (3)](https://blog.acgworldwide.com/topic/defined-benefit-funding) - [fiduciary obligation (3)](https://blog.acgworldwide.com/topic/fiduciary-obligation) - [options (3)](https://blog.acgworldwide.com/topic/options) - [social security (3)](https://blog.acgworldwide.com/topic/social-security) - [IRA (2)](https://blog.acgworldwide.com/topic/ira) - [Roth (2)](https://blog.acgworldwide.com/topic/roth) - [SEP (2)](https://blog.acgworldwide.com/topic/sep) - [SIMPLE (2)](https://blog.acgworldwide.com/topic/simple) - [combo plan (2)](https://blog.acgworldwide.com/topic/combo-plan) - [coronavirus (2)](https://blog.acgworldwide.com/topic/coronavirus) - [cross-tested (2)](https://blog.acgworldwide.com/topic/cross-tested) - [70 1/2 (1)](https://blog.acgworldwide.com/topic/70-1-2) - [ADP test (1)](https://blog.acgworldwide.com/topic/adp-test) - [Case Study (1)](https://blog.acgworldwide.com/topic/case-study) - [Donor Advised Fund (1)](https://blog.acgworldwide.com/topic/donor-advised-fund) - [RMD (1)](https://blog.acgworldwide.com/topic/rmd) - [SECURE 2.0 (1)](https://blog.acgworldwide.com/topic/secure-2-0) - [alternative defined contribution plan (1)](https://blog.acgworldwide.com/topic/alternative-defined-contribution-plan) - [beneficiary (1)](https://blog.acgworldwide.com/topic/beneficiary) - [cash balance (1)](https://blog.acgworldwide.com/topic/cash-balance) - [catch-up contribution (1)](https://blog.acgworldwide.com/topic/catch-up-contribution) - [collars (1)](https://blog.acgworldwide.com/topic/collars) - [contribution (1)](https://blog.acgworldwide.com/topic/contribution) - [death (1)](https://blog.acgworldwide.com/topic/death) - [deductions (1)](https://blog.acgworldwide.com/topic/deductions) - [epcrs (1)](https://blog.acgworldwide.com/topic/epcrs) - [form 5500 (1)](https://blog.acgworldwide.com/topic/form-5500) - [funding deadline (1)](https://blog.acgworldwide.com/topic/funding-deadline) - [hardship (1)](https://blog.acgworldwide.com/topic/hardship) - [integrated (1)](https://blog.acgworldwide.com/topic/integrated) - [interval funds (1)](https://blog.acgworldwide.com/topic/interval-funds) - [late deposits (1)](https://blog.acgworldwide.com/topic/late-deposits) - [mega backdoor roth ira (1)](https://blog.acgworldwide.com/topic/mega-backdoor-roth-ira) - [mistake of fact (1)](https://blog.acgworldwide.com/topic/mistake-of-fact) - [nonspouse (1)](https://blog.acgworldwide.com/topic/nonspouse) - [pension (1)](https://blog.acgworldwide.com/topic/pension) - [plan termination (1)](https://blog.acgworldwide.com/topic/plan-termination) - [put writing (1)](https://blog.acgworldwide.com/topic/put-writing) - [required minimum distribution (1)](https://blog.acgworldwide.com/topic/required-minimum-distribution) - [roth ira (1)](https://blog.acgworldwide.com/topic/roth-ira) - [successor plan (1)](https://blog.acgworldwide.com/topic/successor-plan) - [vcp (1)](https://blog.acgworldwide.com/topic/vcp) see all [![Get the financial stability you deserve in our eBook. ](https://no-cache.hubspot.com/cta/default/2254275/c947ac45-7b15-409c-a041-048f6e0600fa.png)](https://cta-redirect.hubspot.com/cta/redirect/2254275/c947ac45-7b15-409c-a041-048f6e0600fa) [![Share on Facebook](https://static.hubspot.com/final/img/common/icons/social/facebook-24x24.png)](http://www.facebook.com/share.php?u=https%3A%2F%2Fblog.acgworldwide.com%2Fopen-up-529-plan-account%3Futm_medium%3Dsocial%26utm_source%3Dfacebook) [![Share on LinkedIn](https://static.hubspot.com/final/img/common/icons/social/linkedin-24x24.png)](http://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Fblog.acgworldwide.com%2Fopen-up-529-plan-account%3Futm_medium%3Dsocial%26utm_source%3Dlinkedin) [![Share on Twitter](https://static.hubspot.com/final/img/common/icons/social/twitter-24x24.png)](https://twitter.com/intent/tweet?original_referer=https%3A%2F%2Fblog.acgworldwide.com%2Fopen-up-529-plan-account%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&url=https%3A%2F%2Fblog.acgworldwide.com%2Fopen-up-529-plan-account%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&source=tweetbutton&text=Want%20to%20Save%20for%20Education%20Expenses%3F%20Open%20up%20a%20529%20Plan%20Account.) #### Phone: 800-231-6409 or 804-323-1886 | Fax: 804-323-1889 ©2026 ACG Worldwide. All Rights Reserved. ACG Wealth Management is a registered investment advisor with the Securities & Exchange Commission. If you would like to receive a copy of Form ADV, Part II please feel free to contact us at (804) 323-1886 or webmaster@acgwealthmanagement.com. [Important Disclosures](http://www.acgworldwide.com/acg-live/website-disclosure/)