What is a 529 plan?

A 529 plan—named after the section in the Internal Revenue Code that authorizes so-called qualified tuition plans—is an education investment account with rules and guidelines set by individual states. Each state negotiates its fees for management and mutual funds separately, similar to how 401 (k) plans fees are negotiated for companies.

Is a 529 plan a good idea for college?

A 529 plan can be a smart way for you to start saving early for your child’s college education. Still, while every state offers a plan, they are not all the same. The best 529 plans charge the lowest fees and offer a better selection of investment options. Read on to learn more about saving for college, along with 529 plan pros and cons.

How do I open a 529 plan?

You can apply and open a 529 plan online via the plan’s website or through a broker. You’ll need to provide personal details about yourself and the beneficiary, including your Social Security number (SSN), date of birth and contact information. The last step is to fund the plan and select your desired investment portfolio.