Skip to main content

How Celebrities Are Using 529 Plans Like My529 to Secure Their Kids’ Education



Beyond the Mansion Gates: How Celebrities Are Using 529 Plans Like My529 to Secure Their Kids’ Education

When you hear "celebrity," you probably picture a private jet or an Oscar statue—not a college savings account. But even the wealthiest parents in the world, from Hollywood royalty to tech billionaires, are embracing the humble, yet incredibly powerful, 529 college savings plan.

They aren't just using it to pay for tuition at an Ivy League school; they're leveraging the plans for maximum tax and estate planning benefits. The financial strategies of the elite prove that a plan like My529 (Utah's highly-rated, nationally accessible plan) is the smartest move for every family, regardless of your net worth.

Here is a look at the secret sauce of how the A-list is making 529 plans their favorite investment vehicle.

1. The Real Star Power: Tax-Free Growth

For the ultra-wealthy, the biggest benefit of a 529 plan isn't a deduction; it's the tax-free growth of their investments.

Imagine a celebrity who invests a large sum for a newborn. That money compounds, tax-deferred, for 18 years. When they withdraw the money to pay for college, it comes out 100% tax-free at the federal level (and in most states).

  • The Power of My529: Because My529 offers low-cost, high-performing investment options (often featuring funds from Vanguard and Dimensional), it maximizes this tax-free growth potential, turning a massive initial contribution into an even larger tax-advantaged fund.

2. The Private School Loophole: Funding K-12

Many celebrities choose to send their children to exclusive private K-12 schools, where tuition can easily top $40,000 a year.

A lesser-known but critical benefit of the 529 plan is the ability to use up to $10,000 annually (per student) for K-12 tuition.

  • The New Advantage: Recent changes to federal law are expanding this benefit even further, allowing 529 funds to cover a broader range of K-12 expenses like tutoring, curriculum materials, and standardized test fees. For a high-profile family focused on their child's early education, this tax-advantaged funding for private school is a major win.

3. The Grandparent Strategy: Estate Planning Magic

A key reason financial advisors recommend 529s to wealthy clients is for gift and estate planning.

The IRS allows a generous gifting exclusion. A couple can contribute up to $190,000 in a single year (the equivalent of five years of annual gift exclusions) into a child's or grandchild's 529 plan, and that money is immediately removed from the donor's taxable estate.

  • Generational Wealth: This is a crucial strategy for wealthy grandparents to shift massive amounts of assets out of their estate tax-free, establishing multi-generational wealth vehicles that will compound for decades for their descendants.

4. The Exit Strategy: From 529 to Roth IRA

What happens if a celebrity's child earns a full scholarship or decides to become a professional athlete instead of attending college? The money isn't stuck.

Thanks to the SECURE 2.0 Act, unused 529 funds (up to a $35,000 lifetime limit) can now be rolled over into the beneficiary's Roth IRA, penalty- and tax-free, provided the 529 has been open for 15 years.

  • The Ultimate Flexibility: This new provision turns the 529 plan into a flexible, no-regrets savings account. If the funds aren't needed for college, they become a massive head start on a tax-free retirement.

Why the Wealthy Choose Plans Like My529

When a financial advisor works with a high-net-worth client, they often recommend plans like My529 not because of state residency (Utah's plan is open to everyone), but because of its strong national reputation, low fees, and excellent long-term performance.

The takeaway from the celebrity playbook is simple: A 529 plan is not just for the middle class struggling to save. It is a powerful, flexible, tax-advantaged investment tool that belongs in everyone’s financial portfolio—whether you're saving for a state school or a private education under the paparazzi's watch.

Comments

Post a Comment

Popular posts from this blog

How to Build a Personal Finance Plan Using the Baskets Saving Method

Introduction Managing money without a plan is like trying to juggle with your eyes closed—it’s messy and stressful. One of the smartest ways to take control of your finances is by using the Baskets Saving Method , a simple yet powerful strategy that helps you allocate your income into different categories. This approach ensures your money is working for you, covering both needs and future goals. Let’s break down how to create a personal finance plan using this method! What is the Baskets Saving Method? The Baskets Saving Method involves dividing your income into different "baskets" (or accounts) based on specific financial goals. Instead of keeping all your money in one lump sum, you allocate it strategically to ensure financial stability and growth. Step 1: Identify Your Financial Baskets Here are some key baskets you should consider: Essentials Basket (50-60% of Income) – Covers rent/mortgage, utilities, groceries, transportation, and insurance. This ensures you...
Post a Comment
Read more

YNAB Cost: Is It Worth the Investment for Your Budget? 💳📊

Budgeting tools aren’t free… or are they? Let’s talk about whether YNAB’s price tag delivers real value for your money—or if you’re better off sticking with free options. When it comes to budgeting apps, YNAB (You Need a Budget) is like the cool kid in town. It’s smart, efficient, and has helped thousands of people break the paycheck-to-paycheck cycle . But unlike some other budgeting tools, YNAB isn’t free. So, the big question is: Is it worth the cost? Let’s break down the price, what you’re getting for your money, and whether it’s the right tool for your budget. How Much Does YNAB Cost? 💸 YNAB offers a subscription-based pricing model , and here’s the latest breakdown: Monthly Plan: $14.99/month Annual Plan: $99/year (billed annually)—that’s a savings of about $80 per year compared to the monthly option. For new users, YNAB offers a 34-day free trial —no credit card required. That gives you a full month to see if it’s a game-changer for your finances. Is It Expens...
Post a Comment
Read more

🏦💳 Bank of America HSA: Features, Benefits, and Fees Explained

🏦💳 Bank of America HSA: Features, Benefits, and Fees Explained You already know that a Health Savings Account (HSA) is one of the smartest financial tools you can use to crush medical expenses and grow long-term wealth. But where you open your HSA matters. And Bank of America is one of the biggest HSA providers in the game — offering an experience that's easy to manage, easy to invest, and surprisingly robust. So let’s walk through the features, benefits, and fees of the Bank of America HSA — so you can decide if it’s the right move for you. 🏥 First, What Is a Bank of America HSA? A Bank of America Health Savings Account lets you: Save pre-tax dollars for qualified medical expenses Invest your HSA balance once you meet a minimum threshold Use a debit card for easy access to funds Carry your HSA with you — even if you change jobs It’s available through some employers as part of your benefits package, but individuals can also open a Bank of America H...
Post a Comment
Read more