The 529 plan, like the 401(k), is a great vehicle if a client has achieved personal liquidity goals. If not, they are making the exact same mistake, converting a dollar that can be used for anything to a dollar that can only be used for one thing. Many clients like the peace of mind of money being saved for college, but they also like having no debt and having a backstop against uncertainty. Since after-tax money funds the 529, the best suggestion is save the money personally. It maintains the maximum flexibility. Clients risking today to fund an unknown tomorrow is never a good idea.
Tax savings don't come cheap and they require either giving up or giving away assets for a period of time. As you meet with clients this tax season, open the discussion beyond the tax return. It will make you more valuable to your clients and help them make better financial decisions.
Russell Holcombe, CFP, is the founder of Holcombe Financial, a wealth management and financial planning firm in Atlanta. He is the author of the book, "You Should Only Have to Get Rich Once."