After months of sheltering-in-place, many parents are wondering whether it’s best to revert back to traditional schooling or continue homeschooling. We’ve been wondering the same thing.

Before we initially sent our son to preschool last year, we were torn. We couldn’t decide whether preschool was the best thing for our son or whether preschool was just an artificial construct created by society to enable parents to work more.

Given we both didn’t have day jobs, we felt a little bad sending our son to preschool. What were we going to do all day after 2.5 years of spending every moment with him? Preschool felt like we were outsourcing our parental duties. But oh yeah, we had baby #2 coming, so not entirely true.

Wondering how much to contribute to a 529 plan? This article provides a proper framework for 529 plan contributions by age.

Because of the passage of the SECURE Act, the 529 plan has received a functionality boost in 2020 and beyond.

A 529 plan can now be used for:

• All college tuition and qualified expenses
• $10,000 a year for K-12 tuition and qualified expenses
• Apprenticeship programs and qualified expenses
• $10,000 to pay down a qualified education loan repayment for each of a 529 plan beneficiary’s siblings

Given these benefits, if you have kids, contributing to a 529 plan makes even more sense. Always maximize the purpose of your money by taking advantage of any benefits the government throws our way. Goodness knows they tax us hard-working citizens enough!

After a strong 2019, I decided to take a look at my son’s 529 plan. Although it underperformed the S&P 500, it still reached a level that made me question whether it’s possible to contribute too much. That’s right, when determining how much to contribute to a 529 plan, too much might be no good.

A 529 plan is a good way to save and invest for your child’s education. The after-tax money you put into your child’s 529 plan gets to compound tax-free, just like a Roth IRA retirement account. Further, when you use the money to pay for qualified college education expenses like tuition and books, the money is not taxed. The question some ask is whether it’s good to superfund a 529 plan.

Thanks to the 2017 Tax Cut And Jobs Act, $10,000 a year from the 529 plan can also be used to pay for grade school tuition as well. The added flexibility is nice for parents who are considering sending their kids to private school. Tuition can range from between $10,000 to $60,000 a year.

Normally, the maximum each parent is recommended contribute to a 529 plan is based on the maximum gift tax exclusion amount. This amount is $15,000 per parent per year in 2020 versus $10,000 in 1997.

The $15,000 per year is not limited by parent. It is limited by person. In other words, if you get two sets of grandparents to also contribute $15,000 each, along with two parents, that’s six people who can contribute a total of $90,000 a year! If this happens, your child will become a 529 plan millionaire in no time.

Just note, if you give more than $15,000 in cash or assets (for example, stocks, land, a new car) in a year to any one person, you’re supposed to file a gift tax return. You don’t actually have to pay a gift tax since you’re still living. You’re also not going to be sent to prison, like the parents who were caught bribing university officials to help their children gain admission. So don’t worry.

One of the main questions that has come out of my 529 savings guide by age post is whether to contribute to a Roth IRA or a 529 plan. This is a great question I did not think about because contributing to a Roth IRA is not something I have ever done.

Fortunately or unfortunately, by the time I worked a full year in finance, I was no longer eligible to contribute to a Roth IRA due to the income limit requirement. Instead, I just focused on maxing out my 401(k) every year for the next 13 years until I left full-time work for good.

Partly due to my inability to contribute to a Roth IRA, I developed a negative bias towards the investment vehicle. It made no sense to me why the government would set arbitrary income limits for retirement savings when I believed everybody deserved to save efficiently for their future. Further, the article is a nice counterpoint to the 99% positive Roth IRA articles out there.

Now that I’m older, wiser, and have two children to consider, let’s take a look at the pros and cons of contributing to a 529 plan or a Roth IRA for college. I’ll also share some thoughts on which route is best for you.

From a financial perspective, one of the best things to come out of the coronavirus-induced market meltdown is being able to contribute to your children’s 529 plans at lower index prices. Let us dig deep into the recommended 529 plan amounts by age.

Given parents are investing for an expense that might not occur for another 10-18 years, it’s easier to invest in a 529 plan during times of turmoil.

Originally, I had only planned to invest $15,000 into my daughter’s 529 plan in 2020 because I was nervous about the stock market after a 10-year bull run. However, once the stock market started selling off in February and March, I decided to contribute more to her plan.

The stock market kept on tanking until I ran out of bullets. By the end of March 2020, I had ended up superfunding $75,000 into my daughter’s 529 plan.

If I had contributed more, I would have violated the superfunding rule, which allows families to front-load five years worth of contributions ($75,000 per donor/$150,000 per couple) without having to file gift taxes, while protecting their lifetime gift and estate tax exemption.

Given the world felt like it was coming to an end in March 2020, my wife and I decided to have her dollar-cost-average into our daughter’s 529 plan by $15,000 a year for the next five years just in case the recovery takes years.

When the stock market began rebounding in April, so did both of our children’s 529 plans. Today, our son’s 529 plan account is only about twice as large, despite being 3X older.

This is when I began to wonder what is the appropriate 529 plan amount by age. I was beginning to feel like we had over-contributed to our daughter’s 529 plan.