Saving for education has always been important, but today, it’s becoming essential.
With rising tuition costs, increasing student debt concerns, and a growing emphasis on financial wellness, families and employers alike are rethinking how they approach education savings. At the center of that conversation? The 529 plan.
At Vestwell, we’re seeing a clear shift: more states, employers, and financial institutions are prioritizing accessible, digital-first education savings solutions that meet people where they are. And 529 plans are evolving right alongside that demand.
Let’s break down why 529 accounts remain such a powerful tool and why their role is expanding.
The Big One: Tax-Free Growth
529 plans offer one of the most compelling advantages in long-term saving: tax-free growth.
Your contributions can grow and earnings are tax-free when used for qualified education expenses like tuition, books, fees, and even certain room and board withdrawals are completely tax-free at the federal level (and often at the state level, too).
Over time, that tax efficiency can make a meaningful difference, helping families keep more of what they’ve saved and invested working for them.
A Growing Patchwork of State Benefits
While federal tax advantages are consistent, state-level incentives add another layer of value.
Many states offer tax deductions or credits for 529 contributions, effectively rewarding families for investing in education. As more states modernize their programs and expand access, these benefits are becoming a key driver of adoption.
Programs like those powered by Vestwell, including partnerships such as Embark in Oregon, which offers a refundable state income tax credit, and VT529, which also offers a state income tax credit, are helping bring these benefits to more families through streamlined, user-friendly platforms.
A Powerful Gifting and Estate Planning Strategy
529 plans aren’t just savings vehicles: they’re also highly effective estate planning tools.
In 2026, individuals can contribute up to $19,000 per beneficiary annually without triggering gift taxes. For those looking to accelerate savings, “superfunding” allows contributors to front-load five years’ worth of gifts:
- $95,000 per beneficiary for individuals
- $190,000 for married couples
This strategy gives investments more time to grow while potentially reducing taxable estate exposure, all while maintaining control of the account.
More Flexibility Than Ever Before
One of the biggest misconceptions about 529 plans is that they’re rigid. In reality, they’ve become increasingly flexible, especially following recent policy updates.
Thanks to the SECURE 2.0 Act, unused funds can now serve another purpose. If certain conditions are met, up to $35,000 can be rolled into a beneficiary’s Roth IRA.
That means education savings can double as a launchpad for long-term financial security, even if plans change.
Expanding Access Through Employers
One of the most important shifts we’re seeing today is the growing role of employers in education savings.
Forward-thinking organizations are beginning to offer education savings benefits as part of their broader financial wellness strategy, recognizing that student debt and future education costs are top concerns for employees. Some states offer state tax incentives to businesses that contribute to employees’ 529 plans.
This is a major step forward in making 529 plans more widely adopted.
Designed for Accessibility
Another reason 529 plans continue to gain traction: they’re built for broad accessibility.
- No income limits to contribute
- No age limits for beneficiaries
- Usable for children, grandchildren, or even yourself
As platforms modernize and onboarding becomes more digital and intuitive, barriers to entry are falling. That’s a critical part of expanding participation nationwide for families that need these saving opportunities the most.
The Bottom Line: Why This Matters Now
529 plans have always been a smart way to save, but today, they’re becoming part of a much bigger ecosystem.
As education costs rise and financial wellness takes center stage, the way people save is changing. Families want flexibility. Employers want to offer meaningful benefits. States want scalable, modern programs.
529 plans sit at the intersection of all three.
At Vestwell, we believe the future of education savings lies in accessible, technology-driven solutions that expand opportunity for everyone, from individuals opening their first account to families that have been saving for years.
If you’re thinking about how to plan for education, whether as a family, employer, or partner, now is the time to act.
Learn more about how modern 529 programs are evolving at Vestwell and nationwide at CSPN.
About the author:
David Bell is Senior Vice President of Program Management at Vestwell, where he leads Education Savings. This includes 529 plans, Child Savings Accounts and Emergency Savings Accounts. Prior to joining Vestwell, David was the Deputy Director at the Oregon State Treasury where he helped lead the state’s savings programs. David’s work at Vestwell helps to make savings more accessible for individuals, families and historically underserved communities.