To be clear, 529 plans allow parents—and anyone else who's interested—to contribute up to $14,000 per person without incurring a gift tax into an account that will grow tax-deferred and can be withdrawn tax-free if it's used for qualified educational expenses. Moreover, the money can be used for the educational expenses of a sibling or a relative without penalty.
These are all tremendous advantages, but they do not come without drawbacks. One other option is to consider Uniformed Gift to Minors Act/Uniform Transfers to Minors Act accounts, which differ from a 529 plan in several ways.
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For starters, the 529 plan has limited investment options, which can hinder the construction of a diversified portfolio. In addition, the existing portfolio can only be altered once a year (new contributions can be placed in different options). UGMA/UTMA accounts, on the other hand, can be invested in any exchange-traded fund, individual stock or bond that the custodian (parent) finds appropriate.
Should interest rates increase, bonds held inside a 529 plan may decline in value. There would also be limited protection against fat-tail events or geopolitical meltdowns that managed futures, precious metals and real estate investment trusts mitigated during previous market crises.