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.

Should I invest in a 529 plan or a brokerage account?

When saving for college, 529 plans and individual brokerage accounts are two popular options. A 529 plan is a tax-advantaged investment account designed specifically for education expenses. By contrast, a brokerage account is a general-purpose investment account with no specific tax benefits for education savings.

What is a 529 plan?

Named after Section 529 of the Internal Revenue Code (IRC), these plans were originally designed to cover postsecondary education costs. Their scope has greatly expanded in the last decade. In 2017 and 2019, respectively, Congress passed legislation allowing 529 plans to cover the costs of K-12 education and apprenticeship programs.