You don’t “assign” or “allocate” specific accounts to specific goals within your plan -- our advice engine, Path, automatically does this for you. That is, Path will look at all of your accounts and all of your goals holistically, and will automatically find the accounts that can be used to pay for certain goals.
In the case of a college goal, this means Path will automatically find and prioritize funds in any 529 account, since 529s are specifically for college and other qualified education expenses.
There are a few reasons why we built Path this way, and why it works even if you have multiple college goals and/or multiple 529 accounts:
- You can change the beneficiary of your 529 account at any time, so technically you can fund multiple children's college from the same 529. This means you don’t necessarily need to assign one child’s 529 to that child’s college goal.
- College expenses can be covered without a 529 account, so Path will use any available funds towards any planned college expenses. For example, Path projects how much you would need to withdraw from your bank and investment accounts in order to meet the planned college expenses. Path takes into account projected tax implications and penalties on those withdrawals. However, Path prioritizes any 529 funds and Coverdell funds (if available) before anything else for college goals. See this section of our methodology for more details on our college savings assumptions.
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