If you're a parent wondering how you'll pay for your kid's education, here's some bad news: College tuition increases at about twice the pace of inflation.  Those soaring college costs will keep climbing higher.

If you don't want your child to graduate buried by student loans, you'd better start saving early.

Two popular ways to do so: a 529 plan and a Roth IRA.

529 plans were designed specifically for college and grad school expenses. Now you can also use up to $10,000 a year on K-12 tuition under the 2017 Tax Cuts and Jobs Act. Each state operates its own 529 savings plan (a few also have prepaid tuition plans), though you're allowed to shop around and invest in a different state's plan.

A Roth IRA is meant for your retirement, hence the name "individual retirement account." But Roths have built-in flexibility that make them an appealing option for many families saving for education.

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The rules are extremely complex and also vary by state for 529s, but in a nutshell: You fund both 529s and Roths with after-tax dollars, and the money grows tax-free.

If you use 529 funds for IRS-approved "qualified education expenses," your distributions are tax- and penalty-free. But if you withdraw money for reasons unrelated to the account beneficiary's education, you'll typically get hit with taxes and a 10% penalty. (There are a few exceptions: If your child earns a tax-free scholarship, attends a military academy, becomes disabled, or dies, you can avoid the 10% hit.)

You can always withdraw your Roth IRA contributions at any time without paying taxes or a penalty. But earnings are treated differently. Ordinarily, to withdraw your investment earnings before you're age 59 1/2 and the account is at least five years old, you'd pay income taxes plus a 10% penalty on the distribution. But if you use the earnings for qualified education expenses, you'll avoid the 10% penalty, but not the income taxes, provided that the account is at least five years old.

 Your Roth IRA contributions are limited to $6,000 a year or $7,000 if you're 50 or older. There are no 529 plan federal contribution limits, though states have their own restrictions. Most people limit their contributions to $15,000 annually to avoid triggering gift taxes.

While Roth IRAs have income limits, you can fund a 529 plan no matter how much you earn.

So why would you choose a Roth IRA over a 529 plan for college savings? Here are four times it makes sense.

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1. Your child may not go to college.

It's hard to predict whether your kid will go to college if you're saving in their younger years, so you want to avoid the taxes and penalty in case they pass on college. You can change a 529 plan's beneficiary to another family member, so this may not be an issue if you have more than one kid.

But if there's no one else in the family who may be college-bound, you're better off saving in a Roth.

2. You may want the money for your retirement.

You may be on the fence about whether you want to use the money you invest for your retirement vs. your child's college. If you want the flexibility to choose how to spend the funds later on, you don't want to be locked into a 529 plan.

Note: If a Roth IRA is your only retirement account, don't even think about using it for college savings. If you're behind on retirement savings, you should seriously consider whether you can afford to invest in a college savings plan at all.

3. You want to choose how the money is invested.

When you invest in a 529, you're typically limited to a handful of mutual funds, often target-date funds. You're also only allowed to change the investments twice a year, or whenever you change the account beneficiary.

With a Roth IRA, you can invest in virtually anything, including individual stocks, bonds, ETFs and mutual funds, so it obviously wins on flexibility. 

Note that if you're choosing your own investments, it's essential to shift to a more conservative asset allocation as college years gets closer, just as you would when retirement is approaching.

4. You won't need the money until the final two years of school.

If your kid wants need-based aid, they'll have to fill out the FAFSA. The financial aid calculus is tricky, but it boils down to: 529 plan assets count against you, but Roth IRA assets don't. Parent-owned assets can reduce the financial aid award by a maximum of 5.64%.

But it works in reverse for income: Money you withdraw from a Roth IRA does count as income on the FAFSA — yes, even if the IRS doesn't tax it as income. 529 withdrawals for qualified expenses do not count toward your income. Income counts against you to a much greater extent than assets do on the FAFSA, so at first blush the 529 plan seems like a no-brainer compared to a Roth on the financial aid front.

However: FAFSA uses tax returns from two years prior to determine your financial aid. For example, aid for students applying for the 2021-22 school year will be based on 2019 tax returns.

Therefore, if you have an additional source of savings for your child — say, you already have 529 assets and are trying to decide where to put additional college money — a good option would be to use that savings first. Then, use Roth withdrawals in their final two years of school, so the additional income won't affect their financial aid.