The Kiddie Tax Trap in 529 Plan Withdrawals

Lucas and Luna unpack the little-known 'kiddie tax' rule that can turn a 529 plan withdrawal into a surprise tax bill when the beneficiary has unearned income. They walk through the IRS threshold for 2025 ($2,600), explain how the Tax Cuts and Jobs Act changed the rules, and share a real-family scenario where a student's summer internship plus a 529 distribution triggered the tax. The episode also covers the 'parental election' loophole that can save families thousands, and ends with a practical checklist for financial advisors and parents before the first withdrawal. Perfect for anyone funding college through a 529 or advising families on education planning. #KiddieTax #529Plans #CollegeSavings #TaxPlanning #IRS #TaxCutsAndJobsAct #UnearnedIncome #FinancialAid #EducationFunding #ParentalElection #StudentTaxes #SummerInternship #TaxBracket #CapitalGains #FexingoBusiness #BusinessPodcast #Finance #CollegeSavingsPodcast Keep every episode free: buymeacoffee.com/fexingo