Decision Made: Why 529 Plans Are a Popular Choice for Education Savings

A 529 savings plan has remained popular among families with college-bound children. In fact, the number of accounts has continued to grow steadily over time, reaching 16 million at the end of last year.

As of June 2023, assets in 529 plans rose to $470.2 billion, according to the College Savings Plan Network. The average account size climbed to $27,741 in 2023 from $13,188 in 2009.1

Reflecting on “529,” here are some key facts for families to consider about 529 plans.

5: Top five benefits

Tax advantages

You pay no federal income taxes on account earnings while the account is invested. And you will pay no federal income taxes when the money is withdrawn to pay for qualified education expenses.

Control of account

You control the account, even when the child reaches legal age. As account owner, you retain control over withdrawals for the life of the account. In most cases, contributions to the account can be removed from your estate for tax purposes, yet you can retain control over the assets.

No income or time limits on contributions

Unlike certain accounts, such as Roth IRAs, anyone can contribute to a 529 regardless of their income. There is no age or time limit on contributions, unlike some custodial accounts.