529 College Savings Plans

How Does a 529 Plan Work?

You Put Money In
You open an account and contribute whatever fits your family budget. Whether it is $50 monthly or $5,000 yearly, you pick what works for you. The account is in your child's name, but you stay in control of the money.

Your Money Grows Tax-Free
Unlike a regular savings account at the bank, 529 money is invested. It grows without you paying taxes on the earnings. When you let that money sit for 10 or 15 years, the growth adds up significantly.

You Withdraw It for Schooling
When your child is ready for college, you withdraw the money to pay for tuition, room, board, and books. You can even use it for computers and student loan payments. All of those withdrawals are tax-free.

Pennsylvania's Unlimited Tax Deduction

Pennsylvania offers something special that most states do not. You get an unlimited dollar-for-dollar deduction on your 529 contributions. There is no annual limit to how much you can reduce your state income taxes through this plan.

Here is the math. If you earn $100,000 and contribute $10,000 to a 529, you save roughly $750 in PA state taxes right away. You can do this every year. That is real money going back into your pocket to help fund your child's education.

What Can You Use 529 Money For?

Tuition and fees at any accredited college in the country
Room and board expenses
Books and required supplies
Computer equipment and internet access
K-12 private school tuition up to $10,000 per year
Student loan repayment up to a $10,000 lifetime limit

How Much Can You Contribute?

Standard Contributions
For 2026, you can contribute up to $18,000 yearly without any tax reporting. Married couples can put in $36,000 combined.

The Super-Funding Option
A special rule lets you contribute $90,000 in one single year. For couples, that limit is $180,000. The IRS treats this as if you spread the gift over five years. This is a great move if you receive an inheritance or a large bonus and want to fund the account quickly.

What If Your Kid Does Not Go to College?

In the past, unused 529 money was stuck. Now, thanks to the SECURE 2.0 Act, you can roll that money into a Roth IRA. If your child gets a scholarship or chooses a different path, the money still works for them.

Your child can roll 529 funds into their own Roth retirement account if the plan has been open for at least 15 years. They must be 18 or older and can roll over up to $35,000 during their lifetime. This allows the money to keep growing tax-free for their retirement.

Let's Make This Real

Imagine you contribute $3,000 yearly starting when your child is born. By the time they hit age 18, you have put in $54,000. You also saved about $4,000 in PA taxes along the way.

If they only use $40,000 for college, you could roll the remaining $14,000 into their Roth IRA. That $14,000 could grow to be worth over $100,000 by the time they retire. This is the power of compound growth. It all starts with consistent and modest savings. KEEP IT SIMPLE AND START EARLY.

Getting Started Is Simple

You do not need to figure this out alone. Our licensed investment team is here to help you choose the right investments for your timeline. We can show you how to maximize your tax savings and coordinate these plans with your other goals. Whether your child picks college or a trade school, we will help you plan for success.

Take the First Step

Every year you wait is a year of tax-free growth you are missing. That Pennsylvania tax deduction is waiting for you. CALL PAC Financial TODAY.

Schedule a Consultation TODAY (717) 564-6400. Let’s sit down and look at the numbers for your family.

Compliance Notice

This content is for informational purposes only. It should not be seen as specific investment advice or a recommendation. 529 plans have specific rules and restrictions. You should consult with a qualified tax professional and financial advisor before you start a plan. Investment performance is not guaranteed and account values will fluctuate. Tax benefits depend on federal and state law. PAC Financial is not a tax advisor. Please talk to a CPA about your specific tax situation.