To save for college, many parents open up a 529 savings plan for their children. In the United States, the two types of 529 plans that are offered are a prepaid tuition account or educational savings plan, the latter being the most popular. All the earnings on the account are tax-free, which make it a great option for families who want to save for rising college tuition costs. To start a 529 plan, parents should speak with a broker and look up any state-specific regulations.
- A 529 plan can be opened by anyone and is typically opened for a student usually by their parents or grandparents.
- 529 plans can bet set up with a specific broker or they can be sponsored by the state the student lives in.
- They are designed to help students save for college, and there are two different types: an education savings plan and a prepaid tuition plan.
“All states offer 529 accounts and it is easy to get started, they do have reoccurring management fees so be sure to check what those are before proceeding.”