As an agency owner, you’re constantly thinking about leverage –  how to get the biggest impact from your investments. A 529 plan isn’t just a tax-efficient way to save for education – it can also set your kids (or even grandkids) up for long-term financial success, thanks to new rollover options.

Contribution Rules: Parents and Grandparents Can Play

• Annual gift exclusion (2025): Up to $19,000 per child each year without gift tax issues.
• 5-year “superfunding” rule: Contribute up to $95,000 in 2025 at once, which counts as $19,000 spread over 2025 – 2029.

Pro tip: Grandparents can also contribute – or even open a separate 529 for the same child. This creates another powerful estate planning tool, letting them move money to the next generation tax-efficiently.

Beyond Education: Roth IRA Rollovers

One of the biggest changes under the One Big Beautiful Bill (OBBB) is that unused 529 funds can roll into a Roth IRA for the beneficiary.

Here’s how it works:

• Lifetime cap: $35,000 per beneficiary.
  
• Account age: The 529 must be open for at least 15 years.
  
• Annual cap: Rollovers can’t exceed the yearly Roth IRA limit ($7,000 in 2025).
  
• Timing: The child must have earned income (babysitting, summer job, etc.). If they’re under 18, it flows into a custodial Roth IRA until they’re of age.
  

Imagine This Scenario

You set aside $10,000 in a 529 today. If invested at 7% annually, in 20 years that grows to roughly $38,700.

When your child graduates college, you could roll up to $35,000 of that into a Roth IRA for them (subject to the rollover rules).

• At age 42: ~$135,000
  
• At age 62: ~$520,000
  
• At age 67: ~$730,000

That’s a huge retirement jumpstart worth more than half a million dollars, funded from $10k you originally earmarked for their education.

Education First, Options Always

Of course, 529s are still powerful for their main purpose:

• Tax-free withdrawals for tuition, fees, room & board, trade schools, and K–12 education (up to $20k per year starting in 2026).
  
• Flexibility if your child doesn’t need the money for school: transfer to siblings, pay off student loans, or roll to an ABLE account.

Bottom Line

For agency owners, 529s are more than just a college savings tool. They’re a multi-purpose wealth vehicle – helping your kids (or grandkids) with education today and retirement tomorrow. By starting early, you can turn a modest contribution into hundreds of thousands in tax-free retirement wealth.

At Agency CPAs, we help agency owners design tax and financial strategies that create wealth for both their business and their family. If you’d like to explore how a 529 fits into your plan, let’s talk.