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CampusNest™ vs. 529 Plans: Which is the Right Choice for Education Savings?




When planning for your child’s education, you may be familiar with the advantages of a 529 Plan, but have you considered CampusNest™? While both options provide tax benefits and long-term growth potential, they differ significantly in flexibility, accessibility, and overall benefits. Here’s a detailed breakdown of each to help you decide which might be the better choice for your family’s unique goals.


What is a 529 Plan?


A 529 Plan is a tax-advantaged savings vehicle designed specifically for future education expenses. Funds in a 529 grow tax-deferred, and withdrawals are tax-free if used for qualifying expenses such as tuition, room and board, and other educational costs.


What is CampusNest™?


CampusNest™, an innovative approach offered by King Legacy Group, leverages the benefits of Indexed Universal Life insurance (IUL) to offer families not only education funding but also financial flexibility and the opportunity to grow wealth for various life goals. With CampusNest™, families can build cash value that can be accessed tax-free, without being restricted to education-only expenses.


Key Differences Between 529 Plans and CampusNest™


1. Flexibility of Funds


  • 529 Plan: Funds must be used exclusively for educational expenses. Non-educational withdrawals incur income taxes and a 10% penalty on the gains.

  • CampusNest™: Funds can be withdrawn tax-free for any purpose, such as purchasing a first home, starting a business, or even supplementing retirement income. CampusNest™ provides a flexible financial foundation that adapts as your child’s needs evolve.


2. Impact on Financial Aid


  • 529 Plan: Contributions are considered part of the family’s assets in financial aid calculations, which could impact eligibility for aid.

  • CampusNest™: Life insurance policies, including CampusNest™, are generally excluded from financial aid assessments, preserving eligibility for those who may need assistance.


3. Protection from Market Losses


  • 529 Plan: Investments in a 529 Plan are subject to market fluctuations, meaning your savings could decrease during a downturn.

  • CampusNest™: Tied to market indices like the S&P 500, CampusNest™ grows with market performance but includes protections to prevent loss during market downturns, making it a safer choice for long-term growth.


4. Contribution Limits


  • 529 Plan: Contributions are subject to state-specific caps, and larger contributions may have tax implications.

  • CampusNest™: Contributions are virtually unlimited, with limits only based on insurability, providing families the freedom to build substantial cash value.


5. Tax Treatment and Geographic Flexibility


  • 529 Plan: Funds may be subject to taxes if used for international education expenses or non-qualified distributions.

  • CampusNest™: CampusNest™ funds are not restricted by geography, allowing families to access funds tax-free for international education or other financial needs.


6. Self-Completion Feature


  • 529 Plan: 529 Plans lack built-in provisions for continued funding if the account holder becomes disabled or passes away.

  • CampusNest™: With options like the waiver of premium rider, CampusNest™ plans can remain in force even if the policyholder becomes disabled, ensuring continued growth and future access.


7. Long-Term Growth Potential


  • 529 Plan: While 529 Plans may grow faster initially, they are directly linked to market performance, which can be volatile.

  • CampusNest™: While there are initial costs in CampusNest™, its cash value growth can surpass a 529 over time due to its compound interest and market protection, making it an appealing option for those looking beyond college savings, such as retirement income.


Which Option is Right for You?


Consider a 529 Plan If:


  • Your primary goal is to fund education, specifically college, without needing funds for other uses.

  • You’re confident your child will attend college in the U.S., and you’re comfortable with potential market risk.

  • You need an accessible, tax-advantaged education-only savings tool.


Consider CampusNest™ If:


  • You desire flexibility and tax-free access to funds for multiple purposes beyond college—such as retirement or other life goals.

  • You want stable growth, protected from market downturns, with a long-term perspective.

  • You value additional life insurance benefits, including a death benefit and options for continuation in case of disability.


Why CampusNest™ May Be the Better Choice


While a 529 Plan provides targeted, tax-advantaged education savings, its limitations—such as financial aid impact, restricted use, and market exposure—make it less versatile for families looking for flexibility and security. CampusNest™ offers a multi-functional solution, enabling tax-free access for various life needs, protection from market volatility, and additional financial protections, all with the potential for long-term wealth-building.


Choosing between a 529 Plan and CampusNest™ depends on your goals, your family’s financial outlook, and the level of flexibility you need. Schedule a complimentary consultation today to explore which plan aligns best with your family’s unique needs and future vision.


 
 
 

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