May 29 is 529 Day — 529 education savings plans can help parents, family members or others pay for higher education.
Q: How old should my child be if I open a 529 education savings plan, and how much money will I need to open an account?
A: It’s never too late to open a 529 plan. Even if your student is in high school or you are planning to enroll in classes soon, you can still take advantage of the tax benefits of the plan. Most 529 plans have low minimums—some require only $25 or less—and accounts can be opened online, so even the busiest of families can start saving for higher education.
Q: How do you use 529 plans?
A: You can use the assets of the 529 plan at any eligible school around the country and abroad. That includes 2- and 4-year colleges, graduate schools (including law and medical), and vocational/technical schools.1 You can use your account assets for many higher education expenses, including tuition, fees, and certain room and board costs.2
Q: What else do I need to know about a 529 plan?
A: There is no maximum age for a 529 plan—as long as your school is eligible, you can use your 529 plan assets (even if you’re not attending school full-time). Parents, grandparents, aunts, uncles, friends… almost anyone can be an account owner (you can also open your own account). 529 plan owners control the account, which means that you can change your beneficiary to another eligible “member of the family” with no tax penalty.3
1An eligible institution is one that can participate in federal financial aid programs.
2Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
3The availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors.