A 529 is an investment plan that was first introduced in 1996 and is meant as an avenue for helping parents to save money for their child’s college education. Funds invested into a 529 plan can be used to fund college costs at just about any school of your choice. The funds can be used to pay for such things as tuition, room and board and any other mandatory college expenses.
The 529 plans can be set up through a 529 plan manager or a financial advisor. Plans do vary slightly and you will want to make sure you choose one that will fit your child’s future needs. Most plans can be used at any accredited school in the country including state and private schools and even some foreign universities participate in the plan. It is however always wise to read the fine print before signing up.
529 accounts usually offer a variety of investment options including stocks, bonds, mutual funds, money market accounts and more. Account holders can customize their savings
There are some nice tax benefits with 529 Savings plans. All earnings, as long as the funds are used for eligible college expenses, on the account are not subject to federal taxes and in most cases are not state taxed. If however, the funds are withdrawn for other options there will be tax penalties and other fees.