As you dream of your child's future, you might have this question looming over your head: How am I going to pay for my child's college education? As parents, we know that the earlier you start a college fund for your kids, the better.

If you're not sure what other ways you can financially prepare for the coming college years, a good place to start is a 529 college savings plan. These savings plans are designed specifically to help pay for college and are a great investment option for families who want to see their money grow, tax-free, over a stretch of time.


Here are answers to common questions around 529 plans so you can be fully equipped to start saving for your little one's bright future:

What is a 529 savings plan?

A 529 is a state-sponsored college savings plan that allows parents to invest money towards educational expenses. The 529 is beneficial for many reasons, but most importantly, the savings plan is tax-free. Once the beneficiary of the account is college-bound, they're able to withdraw funds free of federal and state income taxes.

By the time college rolls around, the recipient can use the money towards a variety of schooling necessities, such as:

  • Tuition
  • Books
  • Laptops and related technology devices
  • Room and board

Additionally, as of January 1, 2018, families can now also use their 529 plans to pay for private elementary, middle and high school tuition.

What kind of 529 plan should I get?

There are two types of 529 plans:

  • College savings plans: This is the more popular of the two 529 plans. The plan works by establishing a savings account specific to schooling expenses. Contributions are invested, tax-free until the beneficiary is ready for college.
  • Prepaid tuition plans: The prepaid tuition plan allows parents to pre-purchase all or part of tuition costs for an in-state, public school. The investment can then transfer to one of the 250 private or out-of-state colleges sponsored by the plan. This plan is great for locking in current tuition rates, but make sure to consider all the terms, as some schools come with high premiums and are not always guaranteed to be covered.

How do I contribute money to my child's 529 plan?

There are two approaches to contributing to a 529 account:

  • Static funds: Static funds include stocks, bonds, real estate funds or money market accounts. This is a customized plan that tends to be more appealing to investment-savvy folks.
  • Dynamic investment: Dynamic investments are based on the beneficiary's age, which starts off by investing in stocks and higher-risk options. As the child ages, the investment automatically shifts to a steadier, low-risk option. This approach is better for those who prefer a hands-off approach towards investing.

Where should I open my 529 college savings plan?

Although every state offers at least one 529 plan, their investment options and fees look a little different.

You can invest in any state's 529 plan, even if you don't live there or your child won't go to school there. With that said, some states offer tax deductions based off of 529 contributions, so it's worth shopping around to see what plan works best for your current situation.

Starting a 529 college savings plan requires some time and research and before you dive in, it's important to know where you stand. With tools like Intuit's Turbo, you can gain a holistic view of your financial profile and see your income, credit and loan details in a single account dashboard.

Will this impact my child's ability to file for financial aid?

Financial aid takes family income and additional assets into account, but when a student applies for Federal Student Aid, there's a section of the application dedicated to Expected Family Contribution, where the student will note family income and assets, such as the 529 plan.

Fortunately, a 529 is weighed far less than other areas of wealth, which means that it will not greatly impact a student's eligibility for financial aid nearly as much as if the child comes from a wealthy family.

When it's time for college, how does my child access their 529?

Assuming that the 529 plan was open in the parent's name, you would allocate the funds in its totality or on an as-needed basis, on behalf of the recipient. Parents can also transfer the account into the beneficiary's name, when their child is prepared to take on that responsibility. This is also a great time for parents to have the real money talk with their child as they head off to school, so they understand what these funds are used for.

Is my 529 plan tax deductible?

When it's tax time and you're getting ready to file all you'll have to do is answer a few simple questions about your education tax benefits associated with your 529, and you'll be eligible for relevant deductions. If you run into any jams during this process, you can connect with a tax pro or CPA to answer your questions.

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When I was expecting my first child, I wanted to know everything that could possibly be in store for his first year.

I quizzed my own mom and the friends who ventured into motherhood before I did. I absorbed parenting books and articles like a sponge. I signed up for classes on childbirth, breastfeeding and even baby-led weaning. My philosophy? The more I knew, the better.

Yet, despite my best efforts, I didn't know it all. Not by a long shot. Instead, my firstborn, my husband and I had to figure it out together—day by day, challenge by challenge, triumph by triumph.


The funny thing is that although I wanted to know it all, the surprises—those moments that were unique to us—were what made that first year so beautiful.

Of course, my research provided a helpful outline as I graduated from never having changed a diaper to conquering the newborn haze, my return to work, the milestones and the challenges. But while I did need much of that tactical knowledge, I also learned the value of following my baby's lead and trusting my gut.

I realized the importance of advice from fellow mamas, too. I vividly remember a conversation with a friend who had her first child shortly before I welcomed mine. My friend, who had already returned to work after maternity leave, encouraged me to be patient when introducing a bottle and to help my son get comfortable with taking that bottle from someone else.

Yes, from a logistical standpoint, that's great advice for any working mama. But I also took an incredibly important point from this conversation: This was less about the act of bottle-feeding itself, and more about what it represented for my peace of mind when I was away from my son.

This fellow mama encouraged me to honor my emotions and give myself permission to do what was best for my family—and that really set the tone for my whole approach to parenting. Because honestly, that was just the first of many big transitions during that first year, and each of them came with their own set of mixed emotions.

I felt proud and also strangely nostalgic as my baby seamlessly graduated to a sippy bottle.

I felt my baby's teething pain along with him and also felt confident that we could get through it with the right tools.

I felt relieved as my baby learned to self-soothe by finding his own pacifier and also sad to realize how quickly he was becoming his own person.

As I look back on everything now, some four years and two more kids later, I can't remember the exact day my son crawled, the project I tackled on my first day back at work, or even what his first word was. (It's written somewhere in a baby book!)

But I do remember how I felt with each milestone: the joy, the overwhelming love, the anxiety, the exhaustion and the sense of wonder. That truly was the greatest gift of the first year… and nothing could have prepared me for all those feelings.

This article was sponsored by Dr. Brown's. Thank you for supporting the brands that support Motherly and mamas.

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My husband and I always talked about starting a family a few years after we were married so we could truly enjoy the “newlywed” phase. But that was over before it started. I was pregnant on our wedding day. Surprise!

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