If you are raising kids, two things tend to be true at the same time. College keeps getting more expensive, and it is far from the only goal competing for your income. Many of the parents we work with at RHA Wealth are high earners who want to fund a meaningful education for their children without shortchanging their own retirement.
For years, the answer to “How should we save for college?” started (and often ended) with a 529 plan. The 529 is still a strong option, and recent law has made it stronger. But it is no longer the only structure worth considering. We recommend planning for a college strategy that uses the right mix of accounts for your family, not just the default one.
Start With the 529, and Know What Just Changed
The 529 plan remains the workhorse of education savings, and for good reason. Contributions grow tax-deferred, and qualified withdrawals for education come out free of federal income tax. Recent federal legislation expanded what a 529 can do. Families can now use up to $20,000 per year for K-12 tuition, double the previous $10,000 limit. The list of qualified expenses grew to include items such as curriculum materials, tutoring, standardized test fees, and certain postsecondary credentialing programs like licenses and certifications. And if a child ends up not needing all of the money, you can roll up to $35,000 from a 529 into that beneficiary’s Roth IRA, provided the account has been open at least 15 years and other conditions are met.
That last point matters. One of the old objections to 529 plans (“What if my kid doesn’t go to college?”) carries far less weight now. Still, the 529 has boundaries. Non-qualified withdrawals of earnings are taxed and generally carry a 10 percent penalty. That is why we often pair a 529 with other structures that offer more flexibility.
Alternative Structures to Consider
If you have already funded a 529 at a comfortable level, or you want more flexibility than an education-only account allows, three structures come up often in our planning conversations.
Custodial Brokerage Accounts (UTMA/UGMA)
A custodial account, set up under the Uniform Transfers to Minors Act or Uniform Gifts to Minors Act, lets you invest on behalf of your child in a standard brokerage account. There are no contribution limits and no restrictions on how the money is eventually used, as long as it benefits the child. That flexibility is the appeal. The funds can go toward college, a first car, a gap year, or a down payment on a first home.
It’s important to understand the trade-offs. The assets legally belong to your child and transfer to their control at the age of majority, which is 18 or 21 depending on the state. Custodial assets can also weigh more heavily against financial aid eligibility than a parent-owned 529. And investment earnings may be subject to the “kiddie tax,” so coordinating with your CPA is important.
Roth IRAs
A Roth IRA is built for retirement, but it can play a supporting role in education planning. You can withdraw your contributions (not earnings) at any time without taxes or penalties, and the early-withdrawal penalty on earnings is waived when the money is used for qualified higher-education expenses. For 2026, the contribution limit is $7,500 for those under 50, and Roth contributions are subject to income limits.
For a working teenager, a Roth IRA funded with their own earned income can be a smart, long-horizon account. For parents, a Roth is usually better viewed as a flexible backstop rather than a primary college fund, because every dollar you pull for tuition is a dollar no longer compounding for your own retirement. Which brings us to the balancing act at the center of this decision.
Trump Accounts
Trump Accounts are a new type of tax-deferred savings account for children, created under the 2025 federal tax law. Here is what we know so far. Children who are U.S. citizens and born from January 1, 2025, through December 31, 2028, are eligible for a one-time $1,000 federal seed contribution. As of July 4, 2026, families and others can contribute up to $5,000 per year per child, a figure indexed to inflation after 2027, and employers can add up to $2,500 within that limit.
The money is invested in low-cost funds that track a U.S. stock index, and withdrawals generally cannot be made before the year the child turns 18. After that, the account follows traditional IRA rules, which means earnings are taxable when withdrawn. Because a Trump Account is not education-specific, it functions more like a head start on retirement or long-term wealth than a dedicated college fund. The Treasury Department and the IRS have said additional regulations are coming, so some details are still being finalized. We are watching this closely and can help you weigh whether it fits your family’s plan once the account becomes available.
Coordinating College Funding With Gifting
For many affluent families, college funding and estate planning are two sides of the same coin. Grandparents and parents can use the annual gift tax exclusion, $19,000 per recipient in 2026 ($38,000 for a married couple who split gifts), to move money toward a child’s future without touching their lifetime exemption.
529 plans offer a distinctive gifting feature called superfunding. You can front-load up to five years of gifts at once, contributing as much as $95,000 per beneficiary ($190,000 for a couple) in a single year and electing to spread it across five years for gift tax purposes. For grandparents who want to make a generational impact while reducing the size of their taxable estate, this can be a powerful move. These strategies interact with your broader estate plan, so we coordinate closely with your CPA and estate attorney to structure them well.
The Real Question: Impact vs. Your Own Goals
Don’t neglect the conversation that matters most (and the one that’s easy to skip): how much of your children’s education should you fund, and how much should you preserve for your own future?
It’s natural to want to give your kids a debt-free start. But there is no loan for retirement. A parent who overfunds college at the expense of their own plan can create a different problem down the road, one where adult children end up supporting aging parents. The healthiest plans we build strike a deliberate balance. They fund education generously enough to make a real difference for the next generation, while keeping the parents’ retirement, liquidity, and lifestyle flexibility on solid footing.
There is no single right ratio; the answer depends on your income, your timeline, how many children you have, and what you want your money to accomplish. That’s exactly the kind of trade-off our comprehensive financial planning process is designed to make clear.
Bringing it Together
The strongest college funding strategies rarely rely on one account. They layer a 529 for its tax-free education growth, a custodial account or Roth for flexibility, gifting for families who want to involve grandparents, and, for eligible younger children, possibly a Trump Account as a long-term supplement. The right mix is the one that fits your family’s goals, tax picture, and timeline. Our team can align these accounts with your broader investment management and retirement strategy so your own future stays firmly in view. That is worth planning for.
Let’s Map Out Your Family’s Plan
Are you trying to balance college funding with your own long-term goals? We can help you build a clear, coordinated strategy. Schedule a conversation with our team at RHA Wealth in Raleigh, and let’s map out your next step.
Frequently Asked Questions
Is a 529 plan still smart in 2026?
Yes. For most families it remains one of the most tax-efficient ways to save for education. Contributions grow tax-deferred, qualified withdrawals are free of federal income tax, and recent law added flexibility, including a larger K-12 allowance and the ability to roll unused funds into a Roth IRA under certain conditions.
What is a Trump Account, and who is eligible?
A Trump Account is a new tax-deferred savings account for children created under the 2025 tax law. Children who are U.S. citizens and born from January 1, 2025, through December 31, 2028, qualify for a one-time $1,000 federal seed contribution. Contributions can begin July 4, 2026, up to $5,000 per year. The funds follow traditional IRA rules and are not limited to education.
Can I use a Roth IRA to pay for college?
You can. Contributions can be withdrawn anytime tax- and penalty-free, and the early-withdrawal penalty on earnings is waived for qualified higher-education expenses, though income tax may still apply to earnings. Because those dollars are also your retirement savings, we usually treat a Roth as a flexible backstop rather than a primary college account.
How much can grandparents gift toward college?
In 2026, anyone can gift up to $19,000 per recipient ($38,000 for a married couple) without touching their lifetime exemption. With a 529, grandparents can also superfund up to $95,000 per child in one year ($190,000 for a couple) by electing to spread the gift over five years.
How do I decide between funding college and my own retirement?
Start with your own plan. There is no loan for retirement, so the goal is to fund education without compromising your long-term security. A comprehensive financial plan helps you see the trade-offs clearly and set a funding level that supports both goals.
RHA Wealth | It’s Worth Planning For
RHA Wealth is an independent wealth advisory firm in Raleigh, NC, serving high-earning professionals, business owners, and families throughout the Research Triangle and beyond. With credentials spanning CFP®, CEPA®, CPWA®, and CRPC®, the team specializes in liquidity and exit planning, investment management, and tax-efficient strategies—delivering detailed, unbiased planning in close coordination with clients’ CPAs and attorneys.
DISCLOSURES
This article is for educational purposes only and is not intended as tax, legal, or investment advice. Account rules, contribution limits, and tax laws change and depend on your individual circumstances. RHA Wealth coordinates with your CPA and estate attorney to tailor strategies to your situation.
Registered Representative of Sanctuary Securities Inc. and Investment Advisor Representative of Sanctuary Advisors, LLC. Securities offered through Sanctuary Securities, Inc., Member FINRA, SIPC. Advisory services offered through Sanctuary Advisors, LLC., a SEC Registered Investment Advisor. RHA Wealth is a DBA of Sanctuary Securities, Inc.
