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fast facts

• Section 529 is an IRS tax code (created in 1997), which provides tax incentives to families that invest in 529 Plans, which are offered through the states. 

• In January 2002, earnings on funds invested in 529 plans became 100% federally tax-free.

• (2010) Over $157.43 billion is invested in 529 plans.

• (2009) Assets in 529 plans were $133.41 billion.

• (2007) 25 states offer state tax deductions on contributions into their own state plans.

• (2007) 3 states now offer state tax deductions on contributions into any 529 plans, not just their own.

For more details about specific 529 plans, visit 401kid’s 529 Plan Compass.



529 plans

529 Plans, to put it simply, are the best savings vehicles for college funding.  529 plans are more attractive than other forms of college savings, including UGMA/UTMAs, Coverdell ESAs, Series EE and I Bonds, and mutual funds.  The 401kid Education Financing Vehicles Comparison Chart shows how these savings options compare.  Funds from 529 plans can be used at any accredited university in the country while parents maintain control of funds until their children go to college.

Tax breaks
529 Plan investments grow 100% federally tax-free and sometimes state tax-free, amounting to significant tax savings.

Financial Aid
Saving through 529 plans is far more favorable than other savings vehicles for student financial aid eligibility. 401kid ESP Wizard ranks which 529 plans are best for your personal situation, and also measures the effects of your savings on financial aid by calculating your future Expected Family Contribution (EFC).  ESP Wizard shows you how to evaluate plan providers such as Fidelity, Vanguard and TIAA-CREF and college loan providers such as Sallie Mae while maximizing financial aid for students.

Deciding on 529 plans
529 plan laws change frequently.  With over 80 plans, 1,000 investment options and fluctuating underlying mutual funds, the 529 plan universe is quite complex.  It is advisable to use objective methods, such as this interactive wizard, to compare and contrast 529 plans.  A good financial advisor may also be of service for families that do not have time to evaluate investments on their own.  The 401kid Help Center also has answers to Frequently Asked Questions about 529 Plans.

401kid's 529 Plan Toolkit
Side-by-Side Plan Comparison
Top Investment Options
Latest News on 529 Plans
Which Plan is Right for Me?

Don't want to go through the hassle of trying to figure out which plans are best for your family?  Let 401kid ESP Wizard do all the legwork for you. Industry-leading ESP Wizard software includes easy to use college savings, student financial aid and 529 plan recommendations.