Plootus is a free (for now) financial planning platform that analyzes your 401(k) plan and recommends the proper asset allocation for your investment goals. It also identifies the lowest-cost options to help you save on fees.

These days, most employees participate in defined contribution plans through their work. But employers don't do the best job of providing their employees with educational resources to help them make the best investment decisions for their 401(k) or 403(b) plans. Can Plootus help? Find out in this full review. 

What Is Plootus?

Plootus is a financial technology company (fintech) that offers free financial planning tools to help ensure that you are on track for retirement. Plootus's platform allows you to search for your employer 401(k) 403(b), 457, or TSP plan. It's AI-powered algorithm will analyze your financial data to estimate your income needs at retirement, and will make recommendations about the investment/funds you should select inside your retirement account. It also takes investment fees into account to ensure it is recommending the most cost-effective solution.

What Does It Offer?

Here's a closer look at how Plootus works to help you plan for retirement. 

1-Step Process

Plootus refers to its service as a 1-Step Process. You can use its search engine to locate your employer-sponsored retirement account. From there, Plootus will analyze the available investments and make recommendations based on your risk profile. It looks at your current spending patterns and estimates your future retirement income needs. 

401(k) Recommendations

After analyzing your employer-sponsored retirement accounts (401(k), 403(b), 457, TSP, Plootus will provide you with specific recommendations for how you should invest. It focuses on low cost, well-diversified portfolios that are rebalanced over time to stay aligned to your risk-level and investment goals. Plootus aims to provide you with a recommendation within a week of you linking your 401(k) account. However, it can sometimes take up to 30 days. 

Ongoing Support

While you can quit the platform after you receive your 401(k) recommendation, Plootus will provide ongoing monitoring of your investment performance and make recommendations if it feels changes to your asset allocation are necessary. There is no cost involved. 

Can Plootus Provide Recommendations For My 529 Or IRA Plans?

At this time, Plootus only works with employer-sponsored retirement plan accounts. However, the company is considering adding more account types in the future, such as 529s and IRAs.  

Plootus Mobile App

In addition to its web platform, Plootus has a mobile app available for iOS and Android devices. If you don't want to manage your Plootus account on your own, you can delegate access to a financial advisor. And Plootus allows makes it possible to financial advisors to access multiple Plootus accounts. 

Are There Any Fees?

At this time, Plootus is completely free to use, and there are no hidden fees. However, the company does point out that they may start charging a fee in the future, similar to a monthly subcription model used by streaming services such as Netflix or Disney+. There are no contracts to sign, and you are free to leave the platform at anytime. 

How Does Plootus Compare?

The service Plootus offers is unique in that it's limited to employer-sponsored retirement accounts. At least for the time being. If you're looking for more comprehensive financial planning tools that can help you manage all of your financial goals, you might want to consider platforms like ProjectionLab or Boldin. 

ProjectionLab helps you model your finances around your values and the type of life you want to live. It allows you full control over the inputs, including your goals, timelines, and assumptions. For example, if you're trying to decide whether it's better to rent or buy your next home, or determine the financial implications of starting a family, ProjectionLab can help. 

Boldin (formerly NewRetirement) offers both free and paid plans to help people plan for retirement. You can get a free analysis of your retirement income vs. expenses within minutes, or pay an annual fee for more detailed analysis, including multiple scenarios, detailed charting, plan monitoring, budgeting, tax modeling, and more. 

How Do I Open An Account?

You can sign up with Plootus by selecting "Get Started" on its website homepage. From there, you'll be prompted to select your employer's 401(k) and link your bank accounts, credit cards, brokerage, and retirement accounts to the Plootus app. Plootus will use this information to estimate how much money you will need during retirement. 

Is It Safe And Secure?

Plootus takes several steps to ensure that your data is kept secure. They collect very little personal information from clients, and do not ask for a Social Security number or your specific home address. When connecting your bank accounts, Plootus does not collect or store your login details, rather they use a partner aggregator that employs bank-level security, including 256-bit encryption.

Contact

Plootus does not provide support via telephone. Your only option is to contact them by email at support@plootus.com. They monitor their email account during business hours, Monday to Friday. 

Is It Worth It?

If you're enrolled in an employer-sponsored retirement plan account, but don't know if your money is invested properly or if you're on track to meet your retirement goals, Plootus may be worth trying out. There is no cost, no contracts, and setting up your 401(k) for analysis seems like a very simple process. Of course, you will have to link your accounts to get the most accurate recommendations. If you need support beyond your 401(k), then should probably skip Plootus and choose a more comprehensive financial planning tool or consider dealing with a financial advisor. 

Check out Plootus here >>

Features

You can potentially use a 529 plan to pay for trade school, vocational school, and apprenticeships.

If you or your family have saved money for your education within a 529 plan, you can use those funds to pay for qualified education expenses without tax implications. 

But how about students who opt to attend a trade school instead of a traditional college or university? Can you still use the funds in your 529 to cover college costs?

We explore what the funds in your 529 can be used for, whether apprenticeships are eligible, and share some tips of how to fill any potential funding gaps. 

Can You Use A 529 To Pay For Trade School?

Yes, the funds in your 529 can be used to pay for an eligible trade school. Although not all vocational schools are eligible, many are. 

Which Vocational Schools Are Eligible?

You can use the money in a 529 to cover the cost of an education at certain vocational schools. Qualifying trade and vocational trade school programs must be sponsored by schools that are eligible for Title IV federal student aid.

In order to determine if the institution you have in mind accepts federal aid, search for a Federal School Code on the Free Application for Federal Student Aid (FAFSA).

It requires a bit of research, but you can often find a vocational or trade school offering the skill you want to learn that is eligible for your 529 funds. For example, in Ohio, the Ohio Department of Higher Education operates 50 career centers across the state that are eligible for 529 fund use.

Are Apprenticeships Eligible?

An apprenticeship is often a viable alternative to a traditional trade school or vocational school path. Generally, an apprenticeship is a long-term, paid working program that includes both on-the-job training and classroom instruction.

In some cases, you can use 529 funds to cover expenses related to an apprenticeship program. But the apprenticeship program must be registered and certified with the Secretary of Labor to qualify. 

What Expenses Can You Cover With A 529?

As mentioned, if you are attending an eligible trade school or apprenticeship program, you can use the funds in your 529 to cover certain expenses. Qualified expenses include:

• Tuition
• School fees
• Textbooks
• Supplies and equipment required for attendance, including tools
• Computers
• Room and board 

If you use the funds in your 529 to pay for a non-qualified expense, you’ll have to pay federal income tax and a 10% penalty on the earnings. 

How To Fund Any Gaps

In most cases, trade school students with a 529 will be able to use plan funds to pay for their education. However, in some cases, you might need to reconsider which trade school you choose to attend. 

Depending on your situation, your 529 account may or may not have enough funds available to cover all of your education costs. If you can’t pay for all of your trade school expenses using 529 funds, you’ll need to come up with some other ways you can pay for the remaining costs. We outline the best ways to fund the remaining costs from most ideal to least efficient below:

• Scholarships. When you win a scholarship, you can use the money for school and you won’t have to pay it back. Try to apply for at least 50 scholarships to land money for school. Use our guide of scholarships by state to help you find scholarships to apply for. 
• Grants. Grants are another type of financial award that you don’t have to pay back. 
• Personal savings. If you’ve worked during high school or have funds tucked away from holiday presents, consider tapping into those funds to cover your educational costs. 
• A part-time or summer job. It’s usually possible to work while you attend school. Even if you can’t work and attend class at the same time, it’s often possible to work a summer job to build up funds to cover your next semester. Don’t overlook your earning potential as a way to pay for school.
• Employer tuition reimbursement programs. Some employers offer tuition reimbursement as a perk of working for them. A few employers offering tuition reimbursement include Carhartt, Carvana, and Nvidia. When looking for a job, it might be helpful to include employers who offer this perk in your search. 
• Help from relatives. If you have relatives who want to help you pay for school, that’s always a welcome source of funds. 
• Student loans. It’s possible to pay for trade school costs with student loans. But since you’ll have to repay the funds with interest, these should be treated as the last option.

When it comes to paying for school, don’t be afraid to get creative. Generally, it’s a good idea to limit the amount of student loans you take on. After graduation, you’ll be grateful you did everything you could to avoid taking out more loans than you needed to. 

The Bottom Line

It’s possible to use a 529 to fund your trade school education. Although there are limitations on which vocational schools are eligible, many are. Do you research before signing up for classes to ensure you are able to use the funding source you had in mind to pay for school without any penalties. 

Public is a commission-free investing app that focuses a lot on community and social networking. 

In the race to free trading and fractional shares, there are new companies popping up all the time. But Public isn't new - it's actually a re-brand of one of the first app-based investing products called Matador.

However, they have cleaned up their app, made it easier to use, and continue to focus on their social network features. Plus, they offer commission-free investing and fractional share investing. 

How do they compare now that most major brokerage firms also offer commission-free trading? Let's check it out in our Public investing app review.

What Is Public.com?

Public is an app-based stock brokerage company that doesn’t charge commissions on trades. It was founded in 2017. There are four founders: Jannick Malling, Matt Kennedy, Peter Quinn, and Sean Hendelman. 

The company’s legal name is Public Holdings, Inc. doing business as Open to the Public Investing, Inc., a registered broker-dealer and member of FINRA and SIPC. Public used to be called Matador but later changed the front-facing name of the company to Public.

On February 17, 2021, Public announced that it had raised $220 million in a Series D round at a $1.2 billion valuation. Investors included Accel, Greycroft, and Lakestar, Will Smith (via his Dreamers VC), Intuition Capital, Tiger Global, The Chainsmokers’ Mantis VC, and more.

In 2024, Public was named one of the best investing apps in our annual reader survey!

What Do They Offer?

Public.com is an investment platform where you can invest in any asset: from stocks, ETFs, crypto, fine art, collectibles, and more - all in one place, including fractional shares. 

Public is also the first major investing platform to roll out Treasury Bills with on-demand liquidity. This means you can take advantage of their high yield rate of 4.38% (as of this writing), while being able to sell your T-bills anytime you want.

Beyond investing, Public gives you information about your portfolio through data, insights, and analytics to help you be a more informed investor.

Desktop And App-Based Experience

Public is available on both mobile and desktop (desktop support was recently added), and while many can say they prefer investing from desktop devices, their mobile app is available for iOS and Android. 

The iOS app has a rating of 4.7/5.0 out of over 18,300 ratings. The Android app has a rating of 4.5/5.0 out of more than 13,200 ratings. Both apps seem to push out updates consistently.

Public Premium

One new feature to Public is its Premium subscription that provides advanced data, portfolio management tools, and analyst insights to help investors make more informed decisions. Public Premium costs $10 per month (it's free if you have an account balance over $20,000) and provides the following perks:

• As a Public Premium member, you get unique data on all the companies you care about. Think of things like how many Teslas of a specific model have been delivered this quarter or Apple’s sales per continent, etc.
• You also get institutional-grade research from Morningstar, providing the bull and bear cases for many popular stocks, along with downloadable  reporting on competitive pressures, business strategy, and more.
• Access to extended-hours trading—which adds an additional 5 hours trading time in the day for some stocks available for trading during extended trading hours. 
• You can organize the assets in your portfolio into custom groups. Then, compare each group's performance side by side.
• When there’s a breaking story making the rounds, Public Premium’s expert analysts will give you the additional context you need with exclusive audio programming for Public Premium members only.

Themes

Moreover, Public organizes stocks within Themes to help people discover companies based on trends and personal interests. Themes include Green Power (green energy stocks and ETFs), Self-Driving Cars, Women in Charge (female-led companies), and dozens more.

You can also DM or build a group chat with other traders. There are a lot of chats around specific stocks, specific industries, and there are even chats that happen during earnings calls so investors can trade notes. This is chat designed for investors, so you can even embed custom charts.

Dollar-Cost Averaging And Fractional Shares

Dollar-Cost Averaging (DCA) can take the emotion out of investing. Instead of trying to time the market, it's all about building wealth over a longer term, and reducing the impact of market volatility. This way, you’re able to invest equal amounts of money on a regular basis—regardless of the market's ups and downs.

An example of this in practice can be with recurring crypto investments, which is especially helpful for investors who want to manage market risk with a dollar-cost averaging (DCA) strategy.

Public also supports crypto recurring investments. That means you’ll be able to automate the purchase of your favorite coins and tokens. 

They are also one of a growing number of companies that allow you to invest in fractional shares - which means that you can get started investing in pricier stocks with less capital up front.

Public lets you buy fractional shares in stocks, ETFs, crypto, and alternative assets, all in one place. 

However, Public acquired Otis, an alternative asset fractional share investing platform, in 2022. Public users are able to invest in fractional shares of assets like artwork, comic books, sports cards, NFTs, and other collectibles. Public is continuously keeping their alternative asset offerings fresh by being able to invest in assets like music royalties, real estate, wine, and even diamonds.

No Payment For Order Flow (PFOF)

As commission-free trading has quickly become an industry-wide standard, brokers have had to find other ways to make money. Some platforms have chosen to generate income by routing their trades to specific clearing firms. This revenue model is referred to as Payment For Order Flow (PFOF).

PFOF has been much maligned in the investing industry as many have said that it leads to a conflict of interest for brokerages. Despite this, it's still the primary revenue generator for several firms. However, Public isn't one of them. It announced on February 16, 2021 that it was officially a PFOF-free brokerage.

In an effort to replace some of the lost revenue, Public added an optional tipping feature on trades. To be clear, Public does not require any of its clients to leave a tip. But doing so is one way that clients can show their support for Public's desire to align their incentives with their customers.

Options Trading

You can now execute options trading on Public. You'll have access to a strategy builder which allows you to plan your trades and predict potential outcomes. 

Public has advanced charts that let you perform technical analysis, visualize your trades, and an options screener to help you find attractive options contracts. 

The cost to execute an option is where things get really interesting. Public will share 50% of its options revenue with you. 

Day Trading

For those who day-trade, Public may not be the best option. They allow periodic day trading. But if it's done all the time, the trader’s account will be restricted. Accounts that have four or more good faith violations will be restricted for 90 days by Public’s clearing firm, Apex Clearing. They also don't offer margin accounts.

If you are looking to trade, look for an app that specializes in trading like WeBull.

Cryptocurrency Investing

Public allows its users to invest in up to 7 different cryptocurrency options, including Bitcoin (BTC), Ethereum (ETH), Litecoin, and more. 

However, Public does not offer a crypto wallet - this means you actually don't have control over your crypto, and can't use it to transact outside of the Public platform. As such, if you're really interested in investing in crypto, you should use a real cryptocurrency exchange.

Treasury And Corporate Bonds

Public is now offering Treasury Bonds. Their bond screener allows you to search over 10,000 Treasury and corporate bonds. You can sort by yield, maturity date, coupon, credit rating, and more. 

There are no minimum hold periods or settlement days on U.S. Treasuries. And each corporate bond page has key financial information about the company, such as, debt-to-equity ratio and free cash flow so you can make informed decisions quickly and easily. 

There is a flat 0.05% per month fee based on the average daily balance of your Treasury Account.

High-Yield Cash Account

Their high-yield cash account is a great place to store your uninvested funds. As of this writing this account earns a 4.35% APY and has no fees. There is a $20 minimum deposit required to open the account, but after that there are no minimum balance requirements. 

Transfers from the high-yield cash account to your brokerage account happen instantly as long as you do the transfer between 7am and 8pm eastern time. 

The account is also FDIC insured up to $5 million by spreading the funds around at partner banks, while the funds are being transferred they are covered by SIPC insurance. 

Are There Any Fees?

Public is commission-free, but there may be small exchange fees incurred for trades. Additionally, there are fees for various services:

• All broker-assisted phone trades: $30
• Domestic wire transfer: $30
• Domestic overnight check: $35
• Returned check, ACH, wire and recall/stop payments: $30
• ACAT outgoing: $75
• Paper statements: $35
• Mark-up on crypto: 1-2%

How Do I Open An Account?

An account can be opened through the mobile app. You can download the mobile app for iOS or Android from https://public.com. Part of the application process includes an investor profile. This is standard across brokerages.

The requirements for opening an account are:

• Being 18 years of age
• Having a valid Social Security number
• Having a legal U.S. residential address
• Being a U.S. citizen or U.S. permanent resident, or having a valid visa

You can also transfer funds from another brokerage to Public, which Public does not charge a fee for. If the transferring firm does charge a fee, let Public know because for balances above $150, Public will cover the transfer fees from your former brokerage.

You can also fund the account with an ACH transfer from your bank. There is no minimum investment required. Note that Public charges $75 to transfer money out of Public to another brokerage.

You may not be able to withdraw money if funds have not yet settled from recent trades.

How Does Public Compare?

Public is not the only commission-free investing app. But they are one of the few options that allow fractional-share investing and their community features are different. However, it has fewer investment options than other brokers as it does not support mutual funds or bonds trades.

Check out how Public compares to some of the other popular apps here:

Public Bonus Offer

Public doesn't have any bonus or incentive offers at the moment.

Is It Safe And Secure?

Yes — Public is a member of SIPC, which protects up to $500,000 in securities for each customer account. Public also uses AES 128-bit encryption and TLS 1.2 to secure data in transit.

Contact

Public does not offer customer service by phone. However, it does provide live chat support from within the app. You can also email their team at hello@public.com. Their customer service hours are Monday through Friday, 9 AM and 5 PM (ET). Note that if you have a simple question, you may be able to find the answer on Public's FAQ page.

Is It Worth It?

There are similar commission-free brokerages available. Most have some social aspect and the quality of this social component is one thing that can really set these brokerages apart. Additionally, you may gravitate to the community of one brokerage and not the other.

There’s a low barrier to entry to find out if you like Public or not. App functionality will also play a role in your decision as Public gives you context around your portfolio through data, insights, and analytics. Is Public worth trying out? In our view, yes — it could turn out to be the one commission-free brokerage service that you enjoy the most.

Check out Public here >>

Common Questions

Let's answer a few popular questions about Public.

Does Public have a web platform?

Yes, Public recently launched a web platform which makes accessing statements and tax forms much easier.

Can you trade mutual funds on the Public app?

No, mutual funds, bonds, or any other assets besides stocks and ETFs aren't currently supported on Public's investing platform.

How does Public make money?

A few of the ways that Public is able to generate income include securities lending, optional tipping, and earning interest on uninvested cash balances.

Does Public offer any bonuses or incentives to new clients?

Yes, you can earn up to $30,150 when you transfer a new account to Public.

Features

DISCLOSURE

This does not constitute investment advice. Investing involves the risk of loss, including the potential loss of principal. Brokerage services for US-listed, registered securities available on Public are offered by Open to the Public Investing, Inc. (OTTP), a member of FINRA & SIPC, and a wholly-owned subsidiary of Public Holdings, Inc. Brokerage services for alternative investments are offered by the Dalmore Group, LLC, a member of FINRA & SIPC. Alternative investments are over-the-counter equity securities that have been issued pursuant to Regulation A of the Securities Act of 1933. Cryptocurrency trading is provided by Apex Crypto LLC (NMLS ID 1828849). Apex Crypto is licensed to engage in the virtual currency business by the New York State Department of Financial Services. New customers of OTTP receive free stock valued between $3 - $1,000 (0.3% receive the maximum value). *Cash bonus will be applied to qualifying accounts one (1) month after the transfer initiation date. Transferred funds must stay in your Public account for at least 6 months or the bonus will be revoked. Cash bonus terms and conditions are at public.com/transfer-account.

One of the big perks of using a 529 plan to save for college is that many states offer tax deductions for 529 plan contributions. Other states offer tax credits, and some even will allow contributions to any state's plan (this is called tax parity) But, like anything, there are rules that apply.

Some states require you to contribute to their state's plan, while other states allow you to take the tax deduction for contributions to any state's plan. Finally, there are (sadly) states that don't offer any incentives for contributions.

Also, the rules for withdraw can also impact your taxes. Make sure you understand the differences in qualified 529 plan withdrawals so you aren't paying taxes and penalties!

What Is a 529 Plan?

A 529 plan allows you to contribute money for educational use. The funds must be used for education, which includes college or K–12 tuition.

The owner of the account remains in control of the account, while the money is used for a beneficiary (typically the child). This is different from a UGMA or UTMA account, which allows the beneficiary to take control of the account once they reach legal age.

Related: What Is A 529 Plan?

What Is the 529 Plan Contribution Tax Deduction?

Many 529 plans do offer state tax deductions on contributions. Some states even offer a tax credit. But not every state offers the deduction. Plus, there are certain rules you need to follow.

For example, most states only give you the tax credit or tax deduction if you contribute to your state's plan. However, a few states offer "parity", meaning the allow you to get a tax deduction regardless of which state's plan you contribute to.

529 plans do not offer federal contribution tax deductions.

How Do I Open an Account?

You can open a 529 plan with your brokerage or by searching for 529 plans. Once you find one you like, you’ll choose an in-state or out-of-state plan. After the account is opened, you can then choose one of the investment options offered by the plan.

Check out this list here and see where to open the 529 plan that makes the most sense for you:

529 Tax Benefits by State

For most states, you must contribute to your state’s 529 plan (as opposed to an out-of-state plan) to receive any state tax benefit. However, seven states offer tax parity, which allows you to contribute to any 529 state plans.

529 Tax Parity States

These seven states that provide a tax deduction for contributions to any state plan include:

• Arizona: $2,000 single or head of household, and $4,000 for joint filers
• Arkansas: $5,000 for single filers, and $10,000 for married filers
• Kansas: $3,000 for single filers, and $6,000 for married filers
• Minnesota: $1,500 for single filers, and $3,000 for married filers
• Missouri: $8,000 for single filers, and $16,000 for joint filers
• Montana: $3,000 for single filers, and $6,000 for joint filers
• Pennsylvania: $16,000 for single filers, and $32,000 for joint filers

529 Plan Tax Deduction States

The following states offer deductions:

• Alabama: $5,000 for single filers, and $10,000 for joint filers
• Colorado: $22,700 for single filers, and $34,000 for married filers
• Connecticut: $5,000 for single filers, and $10,000 for married filers 
• Delaware: $1,000 for single filers, and $2,000 for joint filers
• Georgia: $4,000 for single filers, and $8,000 for joint filers
• Idaho: $6,000 for single filers, and $12,000 for joint filers
• Illinois: $10,000 for single filers, and $20,000 for joint filers
• Iowa: $5,500 for single filers, and $11,000 for joint filers
• Louisiana: $2,400 for single filers, and $4,800 for joint filers
• Maryland: $2,500 for single filers, and $5,000 for joint filers
• Massachusetts: $1,000 for single filers, and $2,000 for joint filers
• Michigan: $5,000 for single filers, and $10,000 for joint filers
• Mississippi: $10,000 for single filers, and $20,000 for joint filers
• Nebraska: $10,000 for single and married filers, $5,000 if filing separate
• New Jersey: $10,000 per taxpayer, per year
• New Mexico: Full amount of contribution with no limit
• New York: $5,000 for single filers, and $10,000 for joint filers
• North Dakota: $5,000 for single filers, and $10,000 for joint filers
• Ohio: $4,000 per year regardless of filing status
• Oklahoma: $10,000 for single filers, and $20,000 for joint filers
• Rhode Island: $500 for single filers, and $1,000 for joint filers
• South Carolina: Full amount of contribution with no limit
• Virginia: $4,000 per year regardless of filing status
• Washington, D.C.: $4,000 for single filers, and $8,000 for joint filers
• West Virginia: Full amount of contribution with no limit
• Wisconsin: $4,000 per dependent beneficiary, self or grandchild

529 Plan Tax Credit States

The following states offer tax credits:

• Indiana: 20% tax credit on contributions up to $5,000
• Oregon: $170 for single filers, $340 for joint filers
• Utah: 4.85% of contribution, up to $112.06 for single filers, and $224.13 for married filers
• Vermont: 10% tax credit, up to $250 for single filers, and $500 for married filers

No 529 Plan Tax Benefit States

If your state has no income tax, the 529 plan tax deduction doesn’t apply. These states include:

• Florida
• Nevada
• Texas
• South Dakota
• Washington
• Wyoming

Some states do have income taxes but no 529 plan tax deduction. They include:

• California
• Hawaii
• Kentucky
• Maine
• New Hampshire
• North Carolina
• Tennessee

Find your state in our full 529 plan guide here >>

Is It Worth It?

If you want control over the money you’re putting toward a beneficiary’s college tuition, then yes — it is worth it. Be sure the funds will eventually be used for education. If not, you’ll incur a 10% penalty, plus you’ll be taxed at your ordinary income tax rate for non-educational use of the funds.

529 plans are tax-advantaged education savings accounts designed to encourage saving for future education costs.

While these plans are state-sponsored, investors are not limited to their home state’s plan. Opening multiple 529 accounts in different states allows families to diversify their investment portfolios and take advantage of varying investment options and fee structures.

Different states offer a range of investment choices, fees, and performance histories. By selecting plans from multiple states, parents can tailor their investment strategy to align with their risk tolerance and financial goals.

Related: 529 Plan Guide By State

Maximizing Contributions

Each state’s 529 plan has an aggregate contribution limit per beneficiary, ranging from $235,000 to over $550,000. These limits represent the maximum total contributions allowed to a particular state’s 529 plan for a beneficiary.

If a family were to contribute the maximum allowable amount to every state’s 529 plan, the cumulative potential savings could exceed $23 million per beneficiary. While this scenario is uncommon due to the substantial financial commitment required, it illustrates the flexibility 529 plans offer in accommodating large education savings goals.

This could even potentially be used by families to setup dynasty 529 plans or effective education trusts.

It’s important to note that while there is no federal limit on the number of 529 plans one can open, contributions may be subject to federal gift tax rules. For 2024, contributions up to $18,000 per beneficiary per year ($36,000 for married couples) qualify for the annual gift tax exclusion. Additionally, 529 plans allow for accelerated gifting, enabling lump-sum contributions of up to five times the annual exclusion amount without incurring gift taxes, provided no further gifts are made to the beneficiary in the next five years.

Understanding State Tax Benefits

One significant consideration when opening multiple 529 plans is the state tax benefits associated with contributions.

Over 30 states offer a tax deduction or credit for contributions made to their own state’s 529 plan. If your state provides such incentives, contributing to your home state’s plan may offer immediate tax savings.

However, some states extend tax benefits to contributions made to any state’s 529 plan (known as tax-parity).

Regardless of what state you open the 529 plan in, you will be subject to your state's tax laws.

For example, as a California resident, if you open an plan in Arizona, you're still subject to California's rules. So, while Arizona does have a tax deduction, you don't get to claim that on your California tax return (though, if for some reason you also had an Arizona return, you could claim it).

Also, the benefits don't transfer. For example, Arizona allows the 529 plan to be used for K-12 education and converted to a Roth IRA. But California does not. Even if you open an Arizona plan, if you do either of these events as a California resident, you'll be subject to taxes and a penalty.

Financial Aid Implications

While maximizing contributions can significantly boost education savings, it’s essential to consider the potential impact on financial aid eligibility.

Assets in 529 plans owned by the parent are considered parental assets on the Free Application for Federal Student Aid (FAFSA) and can affect the student aid index. However, if your goal is to get millions into a 529 plan, you'll likely not need (or qualify) for financial aid anyway.

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