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What Are the Pros and Cons of a California 529? All of us want to give our children the best chance at life. Part of that is trying to ensure that they have as many options open to them as they go out into the world. For many, the hope is that their children will pursue post-secondary education in some form, whether it is a college, trade school, or university. Sometimes, parents want their child to be able to enroll in a particular type of elementary school. In California, one of the financial tools available to save up for a child's education is the 529 plan. What Is the California 529 Plan? The 529 plan is a state-sponsored investment tool through which you can invest funds that will one day go towards future tuition, fees, books, equipment, supplies, and related expenses. The California 529 lets you contribute up to a particular amount every year in each 529 account without affecting the size of your lifetime gift tax exclusion or requiring you to pay federal "gift" taxes. The investment growth from a 529 is tax-free (state and federal). You cannot contribute any more money to the 529 once the account balance hits $529,000, although the balance can still go up due to the growth of investments. The beneficiary is usually a child or grandchild, but can technically be anyone, even you.