529 Plans: Saving for Your Children's Future

What is a 529 Plan?

A 529 plan is a savings account designed for education expenses. The investments inside grow tax-free, and as long as you use the money for qualified education costs (like college tuition and room and board), withdrawals are tax-free too.

Key advantages

• Tax benefits: Growth and qualified withdrawals are free of federal tax, and many states offer a state tax deduction.
• Flexibility: It can now also cover K–12 tuition (up to a limit) and some apprenticeship programs.
• Control: The account is controlled by the parent (or other contributor), not the child.

Things to watch

• If withdrawals are not used for qualified education, the earnings are taxed and may face a 10% penalty.
• It can have a small effect on your child's financial aid eligibility.

When should you start?

The earlier, the better — more time means more room for compound growth. Even a small monthly contribution adds up meaningfully over the years.

529 rules vary by state. Learn your state's specific policy before opening an account. This article is for education only.