National 529 Day in the United States Date in the current year: May 29, 2024

Post-secondary education has historically played an important role in social success and financial stability. However, higher education in the United States is expensive, and student loans may put a heavy burden on college graduates. To help their children graduate with a minimum amount of debt or even debt-free, parents often start saving for their children’s higher education as early as possible. One of the best ways to save for your child’s post-secondary education is a 529 plan.

A 529 plan is a state-sponsored, tax-advantaged vehicle in the United States designed to encourage saving for post-secondary education expenses. Qualified expenses include tuition, fees, room and board, required supplies and equipment, books, certain apprenticeships, and student loan repayments.

Eligible educational institutions include most schools in the United States and some schools abroad, including accredited public and private colleges and universities, two-year community and junior colleges, graduate schools, vocational and technical schools, and registered apprenticeships. In 2017, K-12 tuition was included as a qualified expense for 529 plans.

529 plans were created by the Congress in 1996. They were named after Section 529 of the Internal Revenue Code (Qualified Tuition Programs). There are two types of 529 plans. Prepaid plans allow to purchase tuition credits in advance at current rates, and savings plans allow to invest in investment portfolios. Savings plans are available in all states, but prepaid plans are only offered by some states.

A 529 plan account can be opened by any US resident over the age of 18 regardless of their income level. The account beneficiary can be anyone with a Taxpayer Identification Number, including the person who sets up the account (in other words, you can open a 529 plan account for yourself).

There are many advantages to the 529 plan. It offers a number of tax benefits, which depend on the state, gives the donor control of the account, allows account owners to withdraw savings at any point (although there is a penalty for “non-qualified” withdrawals) and change investment options and beneficiaries, handles the ongoing investment, and is not counted as part of the donor’s gross estate.

College Savings Foundation (CSF) is a not-for-profit organization based in Washington, D. C. Its mission is to help families and individuals throughout the United States achieve their savings education goals. CSF established National 529 Day to raise awareness about the 529 plan and its advantages. You can observe it by learning more about 529 plans if you need to save for education or by sharing your experiences with a 529 plan if you have already taken advantage of it.