Association of Military Banks of America

National 529 College Savings Plan Day

By Amy Miller, AFC®

May 29th or 5/29 is National College Savings Plan Day, a day to raise awareness about the value of planning and saving for future education expenses with a 529 savings plan.

A 529 savings plan is a tax-advantaged investment account, authorized by Internal Revenue Code Section 529. 529 Savings plans allow savings to grow federal (and some state) income tax-free when used for certain qualified educational expenses.  

Types of 529 Plans

There are two types of 529 Plans – Educational Savings Plans & Prepaid Tuition Plans.

Educational Savings Plans allow participants to save for educational expenses for a designated beneficiary. This is an investment account where funds grow and the contributions and earnings can be used to pay for the beneficiary’s qualified educational expenses like tuition, fees, and room and board. The funds can be used at any college or university, including some outside of the U.S. They can also be used to pay tuition up to $10,000 per year at any public, private, or religious elementary or secondary school.  Education savings plans are sponsored by state governments but are not guaranteed by them and may have residency requirements.

Prepaid Tuition Plans allow participants to pay for future tuition at today’s prices at any of that state’s participating colleges or universities. Prepaid tuition plans cannot be used to pay for elementary or secondary school expenses and can’t be used for room and board at colleges or universities. Most pre-paid tuition plans are sponsored by state governments and may have residency requirements. These plans are not guaranteed by the federal government. Some states may guarantee their plans, but some do not. These plans have restrictions if the beneficiary doesn’t attend a participating college.

Choosing a Plan

Educational savings plans and prepaid tuition plans offer affordable, tax-advantaged options. Choosing the right one will depend upon the goals of both the account owner and the beneficiary. Some important things to be considered include the plan’s annual rate of return, investment options, fees, whether the plan can be purchased directly or if an advisor is required, the minimum required contributions and tax benefits.  

Service members and their families will also need to consider how a 529 savings plan will work along with any G.I. Bill benefits that may be available to meet their educational objectives.  

FINRA offers an online 529 Analyzer that can be used to review specific plan details.

Opening a 529 Plan

529 plans can easily be opened online, often with low minimum initial contributions, through state-sponsored websites administered by financial institutions that have partnered with the state.  The non-profit,, was created by the National Association of Treasurers and offers a search and compare tool, Find My State’s 529 Plan, that can be used to compare each state’s plans.  If you have questions about the right plan for your needs, consider consulting a financial advisor. 

Above all, take advantage of the 529 Day specials — incentives, scholarships, and giveaways — offered by many 529 plans this month during their in-person and virtual events.  Learn more at