529 plan
A 529 plan is a US account for education savings. Gains aren't taxed, and withdrawals for qualified education costs, like college tuition, are tax-free.
🌍 In the real world
Anyone can open one for a child, and many states give a state tax deduction for contributions. Money taken out for other purposes pays income tax and a 10% penalty on the gains.
Plans offer investment mixes that grow more conservative as the child nears college age. Since 2024, a limited amount of unused 529 money can be rolled into the beneficiary's Roth IRA, subject to conditions.
Example
Saving $200 a month from birth puts $43,200 in over 18 years, before any investment gains or losses.
🎮 In Journey Shares
There are no children or college in the game. Like the money plan's order, most guides put saving for a child's education after your own emergency fund and retirement saving. →
🧭 How to use it
The lesson for the game is the order: cover your own cushion and long-term investing first. Plan for bigger goals once those are in place.
🎮 Learn 529 plan the fun way
Try it in a live 3D city with play money: trade shares in real public figures, get margin-called, pay your taxes and rob a bot or two. Free, and nothing real is at stake.
❓ Common questions
Can 529 money pay for school before college?
Yes, up to a yearly limit for K–12 tuition, and it can also cover some apprenticeship costs and student loan repayment, within limits.
What if my child doesn't go to college?
You can change the beneficiary to another family member, roll a limited amount into the beneficiary's Roth IRA, or withdraw it and pay tax and a 10% penalty on the gains.
📜 Where it came from
🧩 Quick check
Which term is this?
“An IRA is a US retirement account you open yourself. A ____ may lower your taxes now and is taxed when you withdraw; a ____ is funded with taxed money and qualified withdrawals are tax-free.”
🔗 Related terms
- IRA (traditional and Roth): An IRA is a US retirement account you open yourself.
- Compound interest: Compound interest is interest earned on both your original money and the interest it has already earned, so savings grow faster over time.
- Asset allocation: Asset allocation is how you divide a portfolio among types of investment, such as stocks, bonds and cash, based on your goals and tolerance for risk.
- Sinking fund: A sinking fund is money you set aside bit by bit for a large expense you know is coming, like a car, a certification or a down payment, so it doesn't land on a credit card.
Categories: Personal finance
Practise with $10,000 in play money
Free. No real money involved.