How a 529 plan works

One of the great advantages of a 529 plan is that it provides you with an easy way to save for college. All you have to do is enroll!

• You open an account ("enroll") in a plan, sponsored either by your home state or by another state. 
• You contribute money to a 529 plan account (you can set up an automatic investment plan to put your contributions on auto-pilot).¹
• Your contributions are invested in one or more investment portfolios that you determined when you first enrolled.
• The investments typically include age-based or individual portfolios. 
• When your beneficiary is ready for college or other post-secondary education, you withdraw the money from your account (you can typically perform withdrawals online, by mail, or over the phone to a client service representative).

That's all there is to it! Here are a few things to remember...

When you're evaluating a 529 plan, you might want to ask:

• Does it have a program that facilitates third-party contributions? (If Aunt Millie wants to make a contribution to your 529 account, is it easy for her to do so? Note that not all states allow third-party contributions.)
• Does your plan offer secure online account management?
• Does the plan offer other services that can help you save?

When you're enrolling in a 529 plan:

• Consider making regular contributions; an Automatic Investment Plan (AIP) is a good way to make sure that you continue to contribute.¹
• Consider "going green" by receiving your account statements and other documents online instead of by mail.
• Make sure you're aware of all of the plan's benefits. If there's a special state tax deduction, make sure you make all of the contributions you can to maximize it. If there's a matching grant program, make sure that you know the eligibility rules and submission dates.

¹ A plan of regular investment cannot assure a profit or protect against a loss in a declining market.