Today is May 29! 529 plans are state-specific savings plans designed to help families set aside money for future expected college costs. The plan is named after Section 529 of the Internal Revenue Code, which started these types of funds in 1996. Parents and other relatives have the option of creating or contributing to these funds in order to help send a child or loved one to college.
We’ll share with you a series of blog posts throughout the day meant to inform and educate you on what 529 is.
529 Basics
While 529 plans vary from state to state, most funds can apply to all schools. A student does not have to worry that the saved money can only be used for certain institutions. So, a student planning on going to college out of state will still be able to utilize the 529 funds. Further, the residents making contributions to the fund are not limited to investing in their own state. A person living in New York can add to a fund based in another state. Also, almost every state offers a plan. It is important for families to research the benefits of creating a plan—like tax incentives or benefits—but there are plenty of 529 options throughout most of the country.
How to Sign Up
There are two main ways a family can start a 529 savings plan. The first is to sign up with a plan manager (click here for a list of plans) and the second is to sign up through a financial advisor. This person will guide you and direct you throughout the savings process.
Check back later today for the different types of plans that are available — or sign up in the righthand sidebar to receive our emails in your inbox.
— Written by Rachel Montpelier
Great post, my daughter is in her 3rd year and we were discussing different loan options..arggg!