Is a 529 a brokerage account?

A 529 is not a brokerage account. A 529 plan is a college savings account that is specifically meant for higher education expenses. Brokerage accounts have many uses and are not only for college savings accounts. There are some key differences between a brokerage account and a 529 plan, which we will discuss below.

How does a 529 plan work if parents own a brokerage account?

If a brokerage account is held in the name of the parents, the calculation would be the same as with the 529 plan owned by the parents. Only 5.64% of the brokerage account assets are counted towards the Expected Family Contribution (EFC). If the money is in a custodial brokerage account, that is technically the child’s assets.

Should you invest in a 529 college savings plan?

For most parents looking for a way to save for their child’s college education, a 529 college savings plan is a wise choice. That’s because the money you invest in one of these accounts grows tax-free if you use the funds toward eligible education expenses. Individual states offer 529 plans.