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What If Bill Gates Used My529? How the Billionaire Would Save for College




What If Bill Gates Used My529? How the Billionaire Would Save for College

Bill Gates, a man whose name is synonymous with massive wealth and strategic philanthropy, is hardly the average college saver. With a net worth measured in the hundreds of billions, the cost of a Harvard education for his children is, well, pocket change.

So, why would a billionaire like Bill Gates bother with a state-sponsored, tax-advantaged college savings plan like My529? The answer lies not in paying for tuition, but in leveraging the 529 plan's hidden power as a sophisticated tool for wealth transfer and tax-efficient estate planning.

This is the advanced playbook for using a My529 plan—a strategy focused on maximizing tax exclusion and long-term generational wealth.

Strategy 1: The "Superfunding" Estate Blitz

For most families, the main benefit of a 529 is tax-free growth. For a billionaire, the most valuable feature is the ability to instantly and massively reduce their taxable estate, thanks to the IRS's Gift Tax Exclusion.

The Gates Move: The cornerstone of his My529 strategy would be the "Superfunding" provision.

  • The Power of Superfunding: In 2025, the annual gift tax exclusion is $19,000 per person. However, 529 plans allow a donor to make a lump-sum contribution of up to five years' worth of gifts at once.

  • The Math: For a married couple like Bill and his spouse, this means they could contribute $190,000 (2 x $95,000) per beneficiary in a single year, immediately removing that enormous sum from their taxable estate.

  • The Result: By "superfunding" accounts for all three children and potentially several grandchildren (or other family members) in a single transaction, the Gates family could move millions out of their estate today, where it will never be subject to the future estate tax, and the money still grows tax-free.

Strategy 2: Maxing Out the Account Balance

While the IRS requires 529 contributions not to exceed the amount required for the beneficiary's education, each state sets a maximum aggregate account balance to define this limit. The My529 plan (Utah) is known for having one of the highest limits in the nation.

The Gates Move: He wouldn't contribute based on expected tuition; he'd contribute based on the maximum state limit.

  • My529's High Limit: The My529 plan has a maximum account balance of $574,000 per beneficiary (as of late 2024/early 2025). Bill Gates could immediately fund separate accounts for each child up to this maximum threshold using the superfunding strategy over a few years.

  • The Benefit: He's not just saving for four years of college; he's investing for a potential lifetime of education—from graduate school to specialized certifications—all growing tax-free for decades.

Strategy 3: The Generational Wealth Cascade

What happens when his children graduate from Harvard, MIT, or Stanford, and the account still holds hundreds of thousands of dollars because they received a mix of scholarships and other funds?

The Gates Move: Leverage the account's flexibility for generational wealth transfer.

  1. Change the Beneficiary: The money doesn't have to be used by the original child. The account owner (Bill) can change the beneficiary to another family member without tax consequence. He could roll the funds to a grandchild's new My529 account, effectively getting a 30-year head start on tax-free growth for the next generation.

  2. The "Roth IRA Rollover" Safety Net: Thanks to the SECURE 2.0 Act, there’s now a lifetime limit of $35,000 that can be rolled from a 529 plan (open for 15+ years) into the beneficiary's Roth IRA. For a billionaire concerned about overfunding, this new rule is a priceless feature. It means any truly "leftover" money can seamlessly transition to a tax-free retirement vehicle.

The Billionaire's Takeaway for Everyone Else

The Gates strategy proves that the My529 plan is more than just a savings vehicle; it's a financial Swiss Army knife.

While most of us aren't worried about the federal estate tax, the underlying principles are the same:

  • Start Early: Utilize the power of compounding—the decades of tax-free growth are the greatest benefit.

  • Maximize the Gift Exclusion: Use the annual gift limit, or even the five-year superfunding rule, to accelerate your savings and maximize time in the market.

  • Don't Fear Overfunding: Modern 529 rules—like the option to change the beneficiary or roll money into a Roth IRA—have eliminated the old fear of saving too much.

Whether you're an everyday family or a software titan, the My529 framework provides a powerful, adaptable, and tax-efficient way to secure an education legacy.

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