529 College Savings Plan
A 529 college savings plan is run either by the state or a higher education institution. They’re designed to help families put away money for their child’s college fund. It is called a 529 because of section 529 of the IRS code. State 529 college savings plans don’t have to be used in the state’s where they are created.
529 plans can be used at qualifying colleges in any state. Be sure to check with your specific plan, but most plans let you send your child to a college from any state.
So which states have a 529 plan? All states now have at least one 529 plan. 529 savings plans are not the same in every state however. Each state decides how many plans it wants to offer and what the rules are for each plan. When looking at a 529 savings plan you’re going to have to find out the specifics of the plan.
529 college savings plans do come with tax benefits and incentives. 529 plans work much like a retirement savings plan in that you can invest your money in a mutual fund or various other types of investments that should beat a high interest savings account rate.
Prepaid 529 plans let you pre-pay for an in-state public education but these plans can be converted to out-of-state or private colleges. You can also enroll in an Independent 529 Plan which is designed if you want to send your child to a private college.
Colleges can offer a prepaid 529 plan but only the state can offer an independent 529 savings plan. If you want to invest in a 529 savings plan you can work directly with a 529 plan manager or your can get one through a financial advisor.