A 529 plan is a savings plan that anyone can open on behalf of a student. Parents, of course, but also grandparents, or other extended family. There are two different kinds of 529 accounts in the US, an educational savings plan or a prepaid tuition account. The educational plan is the most popular funded and helps pay for qualified expenses such as tuition, and room and board, its earnings are tax free so it makes it a good saving option. 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. 529’s can be set up with a broker or the state that sponsors them.
- 529 plans are designed to help people save for college to offset the increasing expense.
- Any person can create a 529 plan to fund college for any child, even if they’re unrelated.
- Read on for information about different 529 plans so you can choose which is best for you.
“There are two different kinds of 529s available in the United States: education savings plans and prepaid tuition plans. Education savings plans are much more common, and they’re usually what people are referring to when they talk about 529s, but this piece will talk you through each form”