My wife is going to get a Master degree in a state university for continue education. She already finished 3 credits. The tuition was just withdrawn from our checking account. We never use 529 plan for us or the kid. The kid is in the college now and the tuition can be paid by my employer 100% but there is a limit, say a couple years.

Suddenly an idea jumps to my mind, why not use 529 for my wife? However is it worth to do that? The total amount for her education is about 12k.

2 Answers 2


The real benefit of the 529 is the tax free growth, similar to a Roth IRA. 18-22 years of growth can add up, the investment doubling or tripling.

In your situation, it's a year or two of growth. Interest rates are low, and I'd not recommend having this money investe in the market for just a year or two. With sub 1% interest rates in savings, it's up to you whether the effort is worth the money you'll save on your taxes.


Some states will give you a tax deduction for 529 contributions. This will allow some tax savings for money that spends a minimum amount of time in the account.

Yes you have missed the best benefit, the tax free growth, but there might be an opportunity for some growth. The child's expenses beyond tuition can be covered by 529 plan. It can even cover room and board if they are living in the dorms, off campus apartment, or even at home. Each University through their financial aid office will calculate the total cost of attendance for each student type.

Before doing this you need to look at several things:

  • Does your state give a tax deduction for contributions to a 529? You need to invest in the correct plan to get this deduction.
  • Is there a minimum amount of time the funds have to be in the plan?
  • Is there a maximum amount of the tax deduction in one year?
  • Understand that what qualifies for the Federal education tax credits and what can be used as a qualified Educational expense from a 529 are different lists, make sure you don't allocate money the wrong way and impact your ability to claim a benefit.
  • Make sure that the plan has the investment option that meets your investment goals.

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