Atlas Meridian Capital
Atlas Meridian Capital: Intelligent Planning for Education
At Atlas Meridian Capital, we recognize the value of education to nurture future generations. We also have experienced the dramatic rise in education inflation over the past twenty years. In this primer, we outline a range of strategies designed to help families prepare for these outsized expenditures so that, when the time comes, our client's can rest assured that costs are covered.
Overview
Education planning is not just about saving for college—it's about optimizing how, when, and by whom educational expenses are funded. Strategic education funding can reduce taxes, preserve eligibility for financial aid, and support intergenerational giving without disrupting broader wealth plans.
This primer provides a comprehensive overview of education funding tools and techniques, including tax-advantaged accounts, gifting strategies, and financial aid optimization.
$90K
Maximum 529 Front-Load
Per donor, per beneficiary using 5-year election
$35K
Roth IRA Rollover
From unused 529 funds starting 2024
Core Education Funding Strategies
529 College Savings Plans
Tax Benefits: Contributions grow tax-free and withdrawals are tax-free when used for qualified education expenses (tuition, books, room & board, etc.).
Contribution Limits: No annual limit, but contributions are considered gifts for tax purposes. Use 5-year election to front-load up to $90,000 per beneficiary (2024).
State Tax Deductions: Some states offer tax deductions or credits for in-state residents.
Ownership: Account owner (usually parent or grandparent) retains control. Can change beneficiaries among qualified relatives.
529 to Roth IRA Rollover
Effective 2024: Up to $35,000 in unused 529 funds may be rolled over to a Roth IRA in the name of the beneficiary.
Requirements:
  • 529 must be open for 15+ years
  • Contributions made within the last 5 years are ineligible
  • Subject to annual Roth IRA limits ($7,000 in 2024)
  • Beneficiary must have earned income
Strategy: Fund 529 with intention of Roth conversion if child receives scholarship or doesn't use full balance.
Custodial Accounts (UTMA/UGMA)
Irrevocable gifts to a minor; income taxed at child's rate but subject to kiddie tax rules. Less favorable for financial aid and less control than 529.
Coverdell Education Savings
Up to $2,000/year per beneficiary; tax-free growth for K–12 or higher ed. Income limitations apply; less commonly used due to small limits and 529 flexibility.
Gift & Tax Optimization
01
Annual Exclusion Gifting
Give up to $18,000/year (2024) per donor/per recipient without using lifetime exemption.
Bunching: Use 5-year front-load rule with 529s to gift up to $90,000 per donor (or $180,000 per couple) per child, removing assets from estate.
02
Tuition Paid Directly to Institutions
Not a gift: Direct tuition payments to qualifying institutions (not room/board) do not count against the annual gift tax exclusion or lifetime exemption.
Ideal for grandparents or high-net-worth donors seeking to reduce estate.
03
Impact of Grandparent-Owned 529s
Historically, distributions counted as student income on FAFSA and reduced aid.
As of 2024–25 FAFSA simplification: Distributions from non-parental 529 plans (e.g., grandparents) no longer reported as income for the student.
Grandparent 529s can now be used strategically without hurting aid eligibility.
Financial Aid Optimization (FAFSA & CSS)
FAFSA Basics
Determines eligibility for federal aid; considers both parent and student income/assets.
  • Parent-owned 529: Reported as parent asset (low impact); distributions not counted as income
  • Student-owned 529 or UTMA: Reported as student asset (high impact); distributions not counted as income
  • Grandparent 529: Distributions no longer count as income (post-2024)
CSS Profile
Required by many private colleges; more detailed and considers home equity, retirement savings, and non-custodial parent assets.

Timing of Income
FAFSA uses "prior-prior year" income (e.g., 2022 income used for 2024–25 FAFSA). Avoid realizing large capital gains or IRA distributions in key years if financial aid is a priority.
Strategic Planning Considerations
Start Early
Compounding tax-free growth makes 529s most powerful when funded early.
Multiple Children
Use one 529 and shift beneficiary over time, or create individual accounts with tailored investment strategies.
Scholarships & Refunds
Unused 529 funds can be withdrawn penalty-free up to the amount of scholarships received (income tax still applies).
Leftover Funds
Repurpose via Roth IRA rollover, change beneficiary to sibling/grandchild, or hold for future education.
Case Study: Maya & Josh
Maya and Josh have three children under 10 and a $10M estate. They want to fund college, reduce estate taxes, and retain flexibility.
We helped them:
1
Create 529s for each child and front-load $180K per child using the 5-year election
2
Create a grandparent-owned 529 for additional strategic aid planning
3
Plan Roth IRA rollovers for unused funds
4
Direct tuition payments for private high school to avoid gift tax implications
5
Monitor FAFSA eligibility using tax projections for each aid cycle
How Atlas Meridian Helps
Custom 529 & Gifting Strategy Design
Tailored planning that aligns with your family's unique goals and tax situation
FAFSA/CSS Impact Modeling
Comprehensive analysis to maximize aid eligibility while optimizing your funding approach
Trust & Estate Coordination
Integration with broader wealth plans for education legacies across generations
Ongoing Strategic Oversight
Continuous monitoring of account ownership, rollover timing, and distribution strategy
Education is an investment in family and future.
Let's make it smart, strategic, and sustainable.