Money Rehab with Nicole Lapin

College Is Expensive. Here’s How Smart Parents Plan for It.

February 23, 2026

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  • The 529 plan remains the foundational, tax-advantaged vehicle for education savings, offering flexibility to roll over unused funds into a beneficiary's Roth IRA (up to \$35,000 after 15 years). 
  • Custodial accounts (UGMA/UTMA) offer maximum flexibility for spending on the child's benefit but carry the risk of the child gaining full control at the age of majority and negatively impacting financial aid eligibility. 
  • Parents should shop around for the best 529 plan, as they are not restricted to their home state's plan, and highly-rated options like those from Utah, Ohio, and Nevada should be researched for low fees and strong investments. 

Segments

Sponsor Messages and Introduction (Unknown)
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Newborn Savings: The 529 Plan (Unknown)
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529 Contribution Limits and Penalties (Unknown)
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Maximizing 529 Contributions
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(00:05:33)
  • Key Takeaway: Parents should leverage friends and family contributions via a UGIFT link (like a baby registry) and utilize credit card rewards programs that direct cash back directly into the 529 account.
  • Summary: After opening the account, parents should actively seek contributions from others using the UGIFT link for birthdays and holidays instead of physical gifts. Certain credit card rewards programs, such as those from Fidelity or You Promise, allow cash back earnings to be automatically directed to the 529. This strategy effectively generates free money based on existing spending habits.
Elementary/Middle School Options: Coverdell & Custodial Accounts (Unknown)
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New Government Savings Option (Unknown)
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High School and Late Stage Planning (Unknown)
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Final Tip: Shopping 529 Plans
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(00:12:07)
  • Key Takeaway: Parents are not restricted to their home state’s 529 plan and should research top-rated plans from other states, such as Utah, Ohio, and Nevada, for better investment options and lower fees.
  • Summary: While a resident might receive state tax deductions for using their home state’s plan, it is crucial to compare offerings nationally. Plans from Utah, Ohio, and Nevada are consistently rated highly for low fees and strong investment choices. Treating the 529 selection like any other investment account by doing homework is essential for maximizing growth.