Saving for college is important for many families. A 529 plan helps you save money for education with special tax benefits. Many people ask: Does Bank of America have a 529 plan? The answer is yes – but with some important details you should know. This guide explains everything in simple terms with real examples, tables, and clear advice.
What is a 529 Plan?
A 529 plan is a special savings account for education costs. The money grows tax-free when used for:
- College tuition
- Trade schools
- K-12 private school (up to $10,000 per year)
- Student loans (lifetime limit $10,000)
Real Example:
The Johnson family in California started a 529 plan when their son was born. After 18 years, they had $50,000 saved for his college – with $12,000 coming from investment growth that wasn’t taxed.
Bank of America’s 529 Plan Options
Bank of America doesn’t offer its own 529 plan, but it works with state plans through Merrill (its investment arm). Here are the details:
| Feature | Bank of America/Merrill 529 Access | Direct State 529 Plans |
|---|---|---|
| Where to Open | Through Merrill accounts | State websites |
| Investment Choices | 20+ portfolio options | Varies by state |
| Fees | 0.40%-0.90% per year | 0.10%-0.80% per year |
| Tax Benefits | State tax deductions if available | State tax deductions |
| Minimum to Start | $250 | As low as $25 |
Key Point: While you can’t walk into a Bank of America branch to open a 529, their Merrill platform lets you invest in multiple state plans.
How to Set Up a 529 Through Bank of America/Merrill
Step 1: Log in to Your Merrill Account
- Existing customers can access through Merrill Edge
- New customers must open a Merrill account first
Step 2: Choose a State Plan
Popular options include:
- Virginia Invest529
- New York’s 529 College Savings Program
- California ScholarShare
Step 3: Select Investments
Options include:
- Age-based portfolios (automatically adjust risk)
- Static portfolios (fixed investment mix)
- Individual fund options
Step 4: Start Contributing
- Set up automatic transfers from your Bank of America account
- Invite family to contribute through gifting options
Real Example:
Teacher Ms. Rodriguez in Texas opened a Virginia 529 plan through her Merrill account. She automatically transfers $200 each month from her Bank of America checking account.
Benefits of Using Merrill for Your 529 Plan
- Easy Management: View 529 and other investments together
- Professional Guidance: Get help choosing investments
- Bank Integration: Transfer money easily from Bank of America accounts
- Gift Feature: Grandparents can contribute directly
Special Perk: Preferred Rewards members get fee discounts on Merrill-managed 529 plans.
Frequently Asked Questions (FAQs)
Can I open a 529 at a Bank of America branch?
No, but bankers can refer you to Merrill specialists who can help set one up.
Which state plan is best?
Consider:
- Your state’s tax benefits
- Investment options
- Fees
Many people choose Virginia or New York plans for low costs.
What if my child doesn’t go to college?
You can:
- Change beneficiary to another family member
- Withdraw money (pay taxes + 10% penalty on earnings)
- Use for trade schools or apprenticeships
How much should I contribute?
A good goal is $250-$500 per month, but even $50 helps. Many plans let you start small.
Can grandparents open a 529?
Yes! Grandparents can open their own or contribute to yours. This doesn’t affect financial aid as much.
Comparison: Merrill vs Direct State 529 Plans
| Factor | Through Merrill | Direct with State |
|---|---|---|
| Convenience | Links to banking accounts | Must manage separately |
| Advice Available | Merrill advisors can help | Limited help |
| Costs | Slightly higher fees | Lowest-cost options |
| Tax Forms | Merrill provides everything | Get from state |
| Investment Choices | Curated selection | Full state options |
Real Example:
The Chen family compared options and chose to go direct with Nevada’s plan for lower fees, while the Wilsons preferred using Merrill to keep all investments together.
Smart 529 Saving Strategies
- Start Early: Even small amounts grow over time
- Automate Contributions: Set up regular transfers
- Use Gift Contributions: For birthdays/holidays
- Review Annually: Adjust investments as needed
- Coordinate with Other Savings: Like scholarships or prepaid plans
Tax Tip: Some states offer tax deductions for 529 contributions – check your state’s rules.
Potential Drawbacks to Consider
- Merrill’s 529 access has slightly higher fees than going direct
- Limited to certain state plans
- Must have a Merrill account
- Not all Bank of America bankers understand 529 details
Workaround: Compare costs between Merrill and direct options before choosing.
How to Maximize Your 529 Benefits
- Check State Tax Breaks – 34 states offer deductions or credits
- Invest Aggressively for Young Kids – More time to recover from market dips
- Tell Family About Gifting – Grandparents can contribute up to $17,000/year without gift tax
- Use for More Than College – Apprenticeships and trade schools qualify too
Real Success Story:
The Park family in Illinois saved $80,000 over 15 years through their Merrill-managed 529. Their daughter now attends university debt-free.
Conclusion: Should You Use Bank of America/Merrill for Your 529 Plan?
Bank of America (through Merrill) offers a convenient way to save for education, especially if you already bank with them. While you pay slightly higher fees than going direct to some states, the integration with your other accounts and access to advisors may be worth it for many families.
Best For:
✔ Bank of America customers who want everything in one place
✔ Investors who want professional guidance
✔ Families who value convenience over absolute lowest cost
Alternatives to Consider:
- Direct enrollment in low-cost state plans
- Custodial accounts (more flexibility but fewer tax benefits)
- Other investment options if unsure about education savings
Final Advice:
Start saving early – even $50 a month makes a difference. Whether through Merrill or directly with a state, the important thing is to begin. Your future student will thank you!
KEYWORDS: Bank of America 529 plan, Merrill Edge college savings, Best 529 plans, How to start a 529, College savings options, 529 plan tax benefits, Education savings strategies, Comparing 529 plans.