Category: Notes

Originally shared on Linkedin

In many states you can use 529 funds for K-12 private school tuition. And by routing payments through a 529 first you can capture a state tax deduction on spending you were going to do anyway.

I’ve noticed so many parents paying private school tuition are leaving free money on the table every year. And it’s all because of a simple sequencing mistake.

Here’s what I mean.

Let’s say you live in Pennsylvania and have two kids in K-12 private school. Tuition is $30,000 per year per kid.

You’re probably writing a check directly from your bank account. Straightforward. Simple. And quietly costing you $1,228 per year in state tax savings you didn’t have to give up.

Here’s a better approach.

The federal limit for using 529 funds for K-12 expenses was bumped up to $20,000 per student per year as of 2026.

So instead of paying tuition directly, first deposit the funds into each child’s 529 Plan. Then pay the tuition from the 529. That’s it.

PA allows you to deduct 529 contributions from your state taxes, and because there’s no minimum holding period before using the funds for qualified K-12 expenses, you’ve effectively turned a routine tuition payment into a state tax deduction.

Here’s the simple math.

• $20,000 per child (the federal limit) × 3.07% PA state tax rate = $614 back per child
• Two kids = $1,228 per year. Every year. For spending you were going to do anyway.

Not life-changing money. But $1,228 in annual savings that compounds over a decade of private school tuition is worth knowing about — especially when capturing it only takes a few steps.

Note, every state has different rules. Some don’t allow K-12 deductions at all. Some have contribution limits that affect the math. Check your state’s specific rules or ask an advisor. If you’re a high earner in a high-tax state, your numbers could look even better than the Pennsylvania example above. The higher your marginal state rate the more this matters.

This is one of those optimizations that looks small in isolation but is exactly the kind of thing that adds up when you’re navigating the squeeze years — private school, mortgage, family life, and trying not to compromise what you’re building for the future.

If you’re navigating the squeeze years I’d be curious what financial questions are keeping you up at night.

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Disclosures: For educational purposes only. Not investment advice.

Originally shared on LinkedIn

Here is how a $3.7M portfolio can end up paying $18,500 a year in “hidden” fees at big institutions.

The Problem:

You think you’re only paying 0.83%, – the AUM rate they quoted you. But this could significantly understate how much your big institution advisor or “Private Client Banker” is actually pocketing from your family.

The Math:

Here is an illustrative, hypothetical example of how much hidden fees on a $3.7M portfolio could be siphoning away:
– $9,250/yr at 0.25% in hidden costs
– $18,500/yr at 0.50%
– $27,750/yr at 0.75%

Where are the hidden fees? This is where things eerily mirror old school advertising industry practices:
– “Below the fold” internal platform fees
– Behind the scenes sales kickbacks (often categorized as 12b-1 fees)
– Trading desk spreads and other internal fees

The Solution:

Take a very close look at your invoices and statements. Fees can be obscured in a variety of ways, like reporting only “net performance” which hides the drag of additional, internal fees.

It is important to perform this audit with any advisor you work with—including us. Transparency should be a requirement, not a preference. We believe investors should know exactly how much they are paying their advisor so they can make an informed decision on whether the value matches the cost.

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• Follow me on LinkedIn where I post observations like this twice a week

• Subscribe to my Substack for longer pieces on income investing and building a life funded by portfolio income, subscribe to my newsletter. No paywalls.

Disclosures: Kangpan & Co. a fee only, registered investment advisor. Hypothetical example for educational purposes only; underlying fund expenses and internal trading costs may vary by institution. Not investment advice.