Backer Review: An Intuitive 529 Savings Plan for Families

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A college education is a pathway to success for many families. However, with tuition rising as fast as inflation, paying for college can be daunting. This is where Backer comes in. The platform offers free and low-cost accounts for parents to save for college education expenses, and it also provides an easy path for friends and family to contribute as well. You can even give the gift of a Backer plan to a young person in your life.

What is Backer?

Formerly known as CollegeBacker, Backer is an online platform that makes it easier for families to save for college. It also enables friends and family to contribute to your child's education through gifting and personalized links to your child's account.

Your funds are held by the 529 Savings Account plan that you choose. Backer does not hold any money and uses All money held by Backer  insured through the SIPC and held by

What is a 529 Savings Account?

529 savings accounts are offered by states and are designed to pay for education. Your contributions grow tax-deferred and are tax-free when used for eligible education expenses. And you do not have to contribute to an account in the same state in which you live. Some states do offer tax incentives for its residents, so do your research or consult with a tax professional to determine if your state qualifies.

Withdrawals are tax-free as long as the money is used for a qualified education expense. If not, withdrawals are taxed as earnings and there is a 10% penalty.

Maximum and Minimum Backer Contributions

Maximum contributions are determined by the Federal government's gift tax exclusion rules. In 2022, the maximum contribution is $16,000 from one gifter to one recipient per year. The gifter may gift to several recipients and multiple gifters can gift to a single recipient. For example, grandma and grandpa can each contribute $16,000 to their three grandchildren. In this example, the grandparents' combined gifts would be $32,000 to each grandchild for a total of $96,000 in one year.

Federal law also allows gifters to accelerate contributions and contribute five years' worth of contributions in one year.

Backer accepts contributions via credit cards, debit cards and bank transfers. There is a $5 minimum contribution, and you can have as many people as you'd like to contribute to your child's account.

Does Backer Affect College Financial Aid?

Yes. 529 plans are considered parental assets and must be disclosed on the FAFSA form. Any parental assets beyond the Asset Protection Allowance amount reduce potential student aid amounts by 5.64% of the amount of the assets.

What Can I Use Backer Money for?

529 savings account money can be withdrawn and used tax-free to pay for qualified higher education expenses. These expenses include college tuition and related fees, room and board, books and supplies, computers and repayment of student loans.

As of 2019, qualified expenses also include tuition for elementary, middle and high school education. These schools can be private, public or religious institutions.

It is highly recommended that you keep records of all withdrawals and expenses in case of an audit.

Does Backer Charge Any Fees?

Backer does not take commissions from the 529 plans they offer. However, they do require a monthly fee for the majority of their administrative services. But the good news is that there are several payment tiers available that range from $1 to $10 per month.

If you cannot afford the monthly minimum payment of $1, simply email [email protected] and they may be able to waive the fee. Moreover, Backer donates 1% of fees paid by customers to support low-income families around the country.

Friends and Family Backer Contributions

Friends and family can gift money to your child through the Backer website by using either your email or your child's personalized link. They can send contributions immediately or schedule donations for later such as a birthday, holiday or another special occasion. These contributions can be one-time or recurring gifts.

As a backer, they'll be able to track your child's progress and see updates from Backer. Backers will not be able to see your child's account, only the amounts that they've contributed to the fund.

Rollover or Link Existing 529 Plans

If you already have a 529 savings account, you may be able to link your existing account to Backer. Currently, there are 19 different 529 Savings Accounts eligible to link to Backer. For those who want all of your accounts on one statement, existing 529 plans can be rolled over to Backer.