Get to Know State 529 Plans
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Most states offer 529 plans and many have more than one. We recommend looking into your own state’s 529 plans first because many offer benefits for residents. That said, you can open a 529 plan account that most any state offers, regardless of whether or not you live in that state, and the money you save in most plans can be used to pay for college anywhere in the country,1 not just in the state that sponsors your plan.
Currently, 34 states offer a tax deduction on the contributions made into a 529. Some will give you the deduction even if you save using a different state’s 529 plan.2
Also, keep in mind that all 529 plan investment gains are federal and state tax deferred. Plus, withdrawals used for eligible college expenses like tuition or room and board are tax-free.
Check out this map of 529 plans
by state to start comparing.
Some states also offer residents benefits like contribution and grant matching programs (for example, a state offering $1 for every $2 contributed) through their state 529 plans in order to help fuel your 529 account’s growth.
529 Savings Plans
All state 529 plans are either managed directly through a bank, brokerage firm, or through a financial advisor. You can open a direct-sold state 529 plan online yourself and select how to invest your contributions.
You can also open a state 529 plan through a financial advisor. These are called advisor-sold plans. Your advisor can help guide you through the investment options. Keep in mind, advisor-sold plans may incur additional fees for maintenance by your financial advisor, and some states require nonresidents to open plans through a financial advisor or broker.
Prepaid 529 Plans
Roughly 15 states also offer prepaid state 529 plans for residents. Prepaid state 529 plans allow you to save and pay for in-state schools at a pre-determined price, locking in tuition costs. This can keep total costs down since you won’t have to worry about rising tuition prices between the time you open the plan account and when you pay for college.
You can typically only prepay tuition to schools in that state's plan, but you don't have to be the resident of the state to open a state 529 plan.
Regardless of which state 529 plan you use, Upromise can help add to your 529 savings. With Upromise, you can earn cash back when you book travel, shop online, or get a bite to eat with our partners.