Choosing a Colorado 529 Plan for Education Savings

Aug 22, 2025

Client Background

A couple with a young child approached us to plan for their child’s future education. They wanted a flexible savings vehicle that accounted for the possibility that their child might not attend college.

Challenge

The couple was torn between a Uniform Transfers to Minors Act (UTMA) account and a 529 plan. They were concerned about committing funds to a 529 if their child chose a non-educational path, potentially facing penalties or taxes on withdrawals.

Solution

After comparing options, we recommended a Colorado 529 plan due to its flexibility and tax benefits. Contributions to a Colorado 529 plan qualify for a state income tax deduction, and earnings grow tax-free when used for qualified education expenses. We outlined the following pros for each option:

Feature UTMA Colorado 529 Plan
Tax Benefits No tax deductions; earnings taxed annually State tax deduction; tax-free growth for education
Flexibility Funds usable for any purpose Primarily for education, but flexible options
Control Child gains control at 21 Account owner retains control
Investment Options Broad investment choices Limited to plan’s investment options

If the child does not pursue higher education, the 529 plan offers flexibility:

  • Change the beneficiary to another family member.
  • Use funds for vocational or trade schools.
  • Withdraw funds for non-educational purposes (subject to taxes and a 10% penalty on earnings).
  • Use up to $10,000 for student loan repayment or K-12 tuition.

Results

The couple began monthly contributions to a Colorado 529 plan, benefiting from the state tax deduction and tax-free growth. The plan’s flexibility reassured them that their savings could adapt to their child’s future choices, whether educational or otherwise, aligning with their goal of financial security.

Are you planning for your child’s future with flexibility in mind? Contact Michael Brady for a personalized consultation to discuss how your wealth can align with purpose and possibility.

Building a Financial Foundation for a Young Family

Aug 22, 2025

Client Background

A young couple with children, just starting their financial journey, sought our help to balance saving for education, retirement, and asset protection.

Challenge

With a low-rate mortgage and dual incomes, the couple faced competing goals: funding their children’s education, saving for retirement, and protecting their growing assets. Limited liquidity posed a challenge for short-term needs.

Solution

We prioritized asset protection by securing life insurance and confirming employer-provided disability insurance. We recommended contributing to a Roth 401(k) for tax-free retirement savings and a non-retirement investment account for long-term, liquid growth. For education, we recommended automatic monthly contributions to a Colorado 529 plan, balancing flexibility and tax benefits.

Results

The couple built a solid financial foundation, with protected assets, tax-efficient retirement savings, and a flexible education fund. Their liquid investment account provided short-term security, while our ongoing guidance ensured that their plan evolved in line with their family’s needs.

Are you starting your financial journey? Contact Michael Brady for a personalized consultation to discuss how your wealth can align with purpose and possibility.