529 Education Savings Plan
A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. Contributions grow tax-free and withdrawals are tax-free when used for qualified education expenses. Most states also offer a state income tax deduction or credit for contributions. It is one of the best ways to save for a child's college education.
2026 IRS Contribution Limits
Key Details
Contributions grow tax-free federally, and withdrawals are tax-free when used for qualified education expenses including tuition, room & board, books, supplies, and computers.
Over 30 states offer a full or partial state income tax deduction or credit for 529 contributions. Check your state's specific benefit.
K-12 tuition is also eligible for up to $10,000 per year per beneficiary from a 529 plan, thanks to the Tax Cuts and Jobs Act.
Superfunding allows you to contribute up to 5 years' worth of the annual gift tax exclusion ($95,000 in 2025) in a single year without triggering gift tax, making it a powerful estate planning tool.
The beneficiary can be changed to another qualifying family member (sibling, cousin, parent, etc.) at any time, giving you flexibility if the original beneficiary doesn't need the funds.
Starting in 2024, unused 529 funds can be rolled over to a Roth IRA for the beneficiary (up to $35,000 lifetime, subject to annual Roth IRA contribution limits). The 529 account must have been open for at least 15 years.
There is no age limit or income restriction on who can contribute or who can be a beneficiary.
Non-qualified withdrawals on earnings are subject to income tax plus a 10% federal penalty. Exceptions include scholarships, disability, and death of the beneficiary.
You are not limited to your own state's plan. Compare plans across states for the best investment options and lowest fees, but check if your state requires using the in-state plan for the tax deduction.
Popular 529 plans with low costs include Utah's my529, Nevada's Vanguard 529, and New York's 529 Direct Plan.