Ask the Expert: Your 529 Questions

This post is part of a 3-part series inspired by our recent Smarter Savings Association webinar on 529 plans.

Part 1: Key takeaways + 529 basics
Part 2: The practical playbook
Part 3 (You’re here): Q&A (your questions, answered by a 529 expert)

Thank you to SSA members and participants who joined our recent 529 webinar with DC College Savings Plan’s David Rydzeski. We pulled the most common questions from the live chat, Q&A queue, and follow-up messages, and organized the expert’s responses below for easy reference.

1) Do I have to use my state’s 529 plan, or can I choose any state’s plan?

David: You can open a 529 plan account in most states other than your own. There are a handful of states where direct-sold 529 college savings plans are available only to state residents, namely Florida, Louisiana, New Jersey, South Carolina, South Dakota, and West Virginia. The Connecticut advisor-sold plan is available only to state residents. Most prepaid tuition plans are limited to state residents.

2) What happens if I start a plan in DC (or another state) and then move?

David: Depending on the state you are moving to, there may be a tax benefit in your new home state. If yes, you may want to stop contributions in the current 529 plan and begin contributions in the new state plan to maximize the tax benefit. You can consolidate assets to the new plan or keep the old and new plans.

3) Are there contribution limits, income limits, or age limits for 529 plans?

David: First, there are no income or age limits for 529 investments.

Most plans do not have contribution limits, but there are guard-rails to taxable consequences based on plan growth of each individual account. For example, DC 529 has a maximum account growth to $500,000. Any amount over would be subject to forced withdrawal to get below that threshold.

Another consideration is the Federal Gift Tax Exclusion. For 2026, the federal gift tax annual exclusion remains $19,000 per recipient, meaning you can gift up to this amount to any individual without filing a gift tax return or using your lifetime exemption; married couples can effectively give $38,000 per person. This amount is subject to inflation adjustments but increased by $1,000, holding steady from the 2025 limit, with the larger lifetime gift and estate tax exemption set at $15 million per person due to the One Big Beautiful Bill Act. These amounts are the guard-rails subject to federal tax if contributions are above these limits. Please consult your tax advisor to discuss the specifics of your situation.

4) What happens if I use 529 money for a non-qualified expense?

David: Using 529 funds for non-qualified expenses triggers federal income tax on the earnings portion and a 10% federal penalty, but contributions (principal) remain tax-free; you report it on Form 5329 and need to track expenses carefully to avoid issues, with exceptions for specific life events like disability or scholarships. Penalties can be avoided by rolling funds to another family member or a Roth IRA. Please consult your tax advisor to discuss the specifics of your situation.

5) Can I change the 529 beneficiary to another child (or even myself)?

David: Yes, you can change a 529 plan beneficiary to another eligible family member, including another child, a sibling, a cousin, or even yourself, often without federal tax penalties, as 529 plans offer great flexibility; the new beneficiary just needs to be a “member of the family” of the original beneficiary.

6) Can you share a college costs calculator that could help me determine how much I need to save?

David: Visit the 529 College Savings Calculator, which combines a future college cost estimate with a 529 savings projection.

7) If I don’t live in DC, how can I locate a 529 plan in my state?

David: The easiest way is to visit the College Savings Plans Network (CSPN) search tool and select your state to see its available plans, plan types, fees, and tax benefits.

8) Can you recommend trusted resources for individuals and families to review to learn more?

David: Here are three resources I recommend to parents and caregivers:

• Savingforcollege.com is a consumer education site focused on helping families understand and use 529 plans and other college-saving strategies. It provides state-by-state plan comparisons, rankings, and research on fees and tax benefits, plus articles explaining rules, withdrawals, and financial-aid considerations. The site also offers calculators and tools to estimate savings needs and evaluate plan options.

• Collegesavings.org is the website of the College Savings Plans Network (CSPN), an affiliate of the National Association of State Treasurers, that serves as an objective clearinghouse on Section 529 college savings and prepaid tuition plans. It provides consumer education on 529 basics and planning, plus state plan search/comparison resources and program data.

• Sallie.com (Sallie) is a college-planning website that helps students and families find “free money” for school (scholarships) and access planning resources for college and campus life. It also connects users to Sallie Mae’s education financing and related offerings (including private student loans and other education solutions).

Need more guidance? Contact our 529 expert David Rydzeski at David.Rydzeski@ascensus.com.

Become a member of SSA to download our series of quick guides on 529 plans and saving for college.