Types of 529 plans

There are 2 basic types of 529 plans: prepaid tuition plans and savings plans. States are permitted to offer both types. And each state has its own plan. Each is somewhat unique. A qualified education institution can only offer a prepaid tuition type 529 plan.

Prepaid Plans allow one to purchase tuition credits at today's rates to be used in the future. Performance is based upon tuition inflation. These are usually established during enrolment periods administered by states or higher education institutions. States  include Florida, Illinois, Massachusetts, Michigan , Maryland, ,Nevada, Texas, and Virginia provide a prepaid tuition plan that is accepting new applicants.

Savings Plans are different in that all growth is based upon market performance of the underlying investments. College savings plans enable contributions to be created to the account on behalf of the selected beneficiary. These will typically be established at any time, together with now once the selected beneficiary is born. Most 529 savings plans offer a variety of age-based asset allocation options where the underlying investments become more conservative as the beneficiary gets closer to college age. Savings plans may be administered by states only.