You've heard of 529 plans. Everyone has. When your baby is born, someone says "you should open a 529" the way they say "you should get a pediatrician." It's the default advice.
A 529 is a fine option for some families. But it's not the only option. And if you've been hesitating to start one, that hesitation might be worth listening to.
What a 529 does well
A 529 offers tax-free growth and tax-free withdrawals for qualified education expenses. If you're confident your child will attend college and you'll use every dollar for tuition, room, and board, a 529 can work.
Where families run into trouble
The word "qualified" is where it gets complicated. A 529 is designed for education. If your child doesn't go to college, changes course, gets a scholarship, or uses less than you saved, the remaining money faces taxes and penalties.
That's not a flaw in the 529. It's doing what it was designed to do. But life doesn't always follow the plan, and a lot of parents want something more flexible.
Other options worth knowing about
Here are a few alternatives, in plain language:
Custodial accounts (UGMA/UTMA)
You invest money in your child's name. No restrictions on how it's used, but no special tax benefits either. The money becomes your child's at age 18 or 21, and they can use it however they want.
Roth IRA (for your child)
If your child has earned income, you can open a Roth IRA in their name. Tax-free growth and tax-free withdrawals in retirement. The catch: your child needs to have income, which usually means they're a teenager with a job.
Child Life Portfolio
A plan that grows tax-free, has a 0% floor (your money can't go backward in a bad market year), and can be used for any milestone, not just education. College, a first home, starting a business, retirement income. No restrictions. No penalties for choosing a different path. Built-in life insurance protection included.
This is the plan Drew helps families set up. It's the one option where you don't have to predict your child's future to plan for it.
How to think about this decision
The right option depends on your family. If you're certain about college, a 529 can make sense. If you want flexibility, or if you're not sure what your child's life will look like, a more flexible plan might be a better fit.
The worst option is doing nothing because you can't decide. Starting something that can grow and adapt is better than waiting for the perfect answer.
Want the full side-by-side comparison? Beyond529 breaks down the specific differences in detail.
One more thing
If you already have a 529, you don't have to abandon it. Some families keep a 529 for education and add a Child Life Portfolio for everything else. It's not either/or. Drew can walk you through how the two work together.