• Tax-free growth when used for qualified education expenses
• High gift-tax contribution limits: $19K per contributor per year (indexed)
• New ability to convert up to $35K into a Roth IRA for the beneficiary

• Relatively complex with penalties and taxes on non-qualified withdrawals
• Limited, state-approved investment options
• Risk of underutilization if the child does not pursue qualifying education

• Technology and AI could significantly reduce education’s cost structure in the future
• Roth conversions are capped at $35K lifetime
• The 529 must be open 15 years, and contributions must age 5 years before conversion
• Conversions require the beneficiary to have earned income (i.e. they could Roth anyway)
• Annual Roth contribution limits still apply (e.g., $7.5K in 2026), so completing the full $35K conversion would take five years

• Brokerage account where up to $2.7K of unearned income can be tax-free each year
• High gift-tax contribution limits: $19K per contributor per year (indexed)
• Broad investment flexibility — stocks, bonds, funds, etc.
• Few restrictions on how funds may be used for the child’s benefit
• Potential for low taxes on capital gains, but subject to marginal “kiddie tax” at parent’s rates until tax-independency or age 24 

• Higher income or capital gains could trigger the kiddie tax at the parents’ marginal rate
• Assets count as the child’s for financial-aid purposes

• Custodians have some ability to spend down the account for legitimate child expenses if the child is a wild-child in the later teen years

• Tax-free growth for qualified education expenses
• More flexible investment choices than most 529 plans

• Low contribution limit: $2K per year plus income limits restrict who can contribute
• Essentially irrelevant today given the expanded options within 529 plans

• $1K government seed deposit for children born 2025–2028
• Contribution limit of $5K per year in 2026, indexed to inflation
• Parent employers may contribute up to $2.5K per year (also indexed)
• Tax-deferred growth with Roth-conversion opportunities beginning at age 18
• No earned-income requirement for Roth conversions 
• Roth conversions are ideal in low-income years starting after age 18 once the child has transitioned to tax-independency of parents or at age 24 when “kiddie taxation” ends. Early tax independence could even be a combined Roth plus student financial-aid strategy
• Potential to convert large account values over several years at relatively low tax rates (potentially marginal 10-12% tax-rates, but averaging less due to the standard deduction).

• Investment options limited to low-cost indexed stock funds (not necessarily a drawback)
• Penalty-free withdrawals must wait until age 59½, but the accounts could be advantageous even including penalties
• Limited custodian control and intervention possibilities if the teen is a wild-child

• If Roth conversions are not undertaken during the child’s low-income years, a UGMA invested to capture long-term capital gains tax-rates may outperform a Trump Account taxed at ordinary income tax-rates
• Watch this space as future adjustments or eligibility changes are possible

• Parents’ retirement account fundings remain their top priority - 401K’s at a minimum up to the match, HSAs with their triple tax advantages, and Roths as long as eligible within income limits.
• A Trump account has already been initiated to secure the free $1K government seed contribution – grows to potentially $2.6K at age 18 after penalties and taxes.
• Limited 529 funding has also been initiated to start the 15-year clock for potential later Roth conversions. 
• The family’s next priority is to fund the Trump account which starts at $5K later this year. Maximizing the Roth conversion opportunity will require ~$116K of contributions (at 3% inflation) over 18 years which we grandparents intend to help fund. I estimate the Roth converted Trump account could grow to ~$2 million of tax-free money at age 60 (6% growth) assuming early-age Roth conversions, and the Wall Street Journal projects as much as $3 million (link likely paywalled).
• The subsequent priorities are to start UGM taxable account and 529 account contributions in parallel to perhaps initial levels of about $35K each. This may take our family some years depending upon available resources for contributions.

• We will skip Coverdells as the alternatives offer ample savings opportunity in the child’s name ($200K+). 
• Depending upon spare resources available for gifting, we can always reassess future contributions. 

John Yeigh is an author, coach and youth sports advocate. His book “Win the Youth Sports Game” was published in 2021. John retired in 2017 from the oil industry, where he negotiated financial details for multi-billion-dollar international projects. Check out his earlier articles.

HOW DO YOU COMPETE in an investment contest when you’re a firm believer that investors can’t consistently beat the market averages? That was my dilemma several years ago.

A school not far from where I taught was given money by an alumnus to endow the St. Louis Area Collegiate Investment Contest. All colleges and universities in the area are invited to participate in the competition, which is held regularly. Each is given a hypothetical $1 million and asked to select 20 value stocks. An outside investment firm oversees the contest. They “invest” $50,000 in each of the 20 stocks. Whoever’s portfolio is worth the most two years later wins $10,000—real dollars, that is.

How do we select the 20 stocks for our entry? When I explain the contest to students, I also discuss the evidence that most investors don’t outperform the market. I suggest we could tape the stock pages of The Wall Street Journal to the wall and literally throw darts at it. Several students like this option.

But instead, I distribute Value Line’s current list of 100 stocks most likely to outperform the stock market over the next year. To focus on value stocks, I take these 100 stocks deemed most likely to outperform, circle the 40 or so companies with the lowest price-earnings ratios and ask students to select stocks from this list.

Value Line Investment Survey, which is often available at larger libraries, evaluates approximately 1,700 stocks. Value Line gives each stock a timeliness rating from one to five, indicating its belief that the stock will outperform the market over the next year. My initial list for the students draws on those stocks rated one for timeliness.

Rating             Number of Stocks    Meaning

1                      100                             Most likely to outperform

2                      300

3                      900

4                      300

5                      100                             Least likely to outperform

Value Line has a full-page analysis of each of these 1,700 stocks. Each stock gets a full review every 13 weeks, which means each week it updates this detailed analysis for about 130 stocks. But each week, all 1,700 stocks are evaluated for timeliness.

Some 30 or 40 years ago, there were a few academic studies indicating that Value Line could outperform the market averages. I have seen no recent independent studies of Value Line. My guess is that any advantage Value Line might have had decades ago no longer exists.

While I don’t believe Value Line will outperform the market, it’s one way to narrow down the list of potential stocks. It’s definitely safer than letting college students throw darts in a classroom.

Six schools entered the first contest. We won, receiving $10,000 and an oversized check. I took the check to our next faculty meeting and bragged about our business students. Most faculty assumed I had superior stock-picking skills, and I did not disabuse them of that view. But in my heart, I firmly believed it was just luck.

Six years later, we won again. If six schools enter each year, we ought to win about every six years. I didn’t point out that obvious fact when I went to the faculty meeting with that oversized check.

The very next year, we won again. Did that indicate we had a winning method? No. If six schools enter, and if the winner is completely random, the chance of this year’s winner winning again next year is one out of six. While my method of picking stocks might be superior, I believe two wins in a row is simply a random occurrence.

Recently, the contest was modified. Instead of starting just once a year, it now starts every semester. The payoff for winning was reduced from $10,000 once a year to $5,000 each semester. The number of participating schools has dropped to just four or five, increasing our odds of winning each contest.

Although I'm now retired, our school continues to follow the above method. Over the years, we have won $35,000. We call it our slush fund. Our department has used that money for additional faculty enrichment opportunities, student awards, end-of-the-year catered dinners for graduates and their families, and a host of other good causes. Perhaps most important, our finance students have learned some important lessons about how the stock market works.

Larry Sayler is the only person with a Wharton MBA who also graduated from Ringling Bros. and Barnum & Bailey’s Clown College. Earlier in his career, he served as CFO for three manufacturing and service organizations. For 16 years before his retirement, Larry taught accounting at a small Christian college in the Midwest. His brother