What is a 529 Plan?

It is a tax-advantaged investment plan created for American families to encourage saving for the future education expenses of a designated beneficiary.

10 Things You Should Know About 529 Savings Plans


They Pay for More than Just Tuition

Savings can be used for any qualified tuition expense. Additionally, for accredited higher education schools (e.g. college or vocational schools), savings can be used for additional qualified expenses including mandatory fees, supplies, books or other required equipment, and room and board, if the beneficiary is enrolled at least half-time.1


You Can Change Beneficiaries

The beneficiary can be changed to a member of the immediate or extended family (including siblings, grandchildren, nieces, nephews, cousins and more).


The Owner Controls 529 Plan Assets

The account owner—not the beneficiary—maintains control of the assets, including how and when they will be used.


Flexible Contribution Amounts

Some 529 plans allow account owners to open an account with as little as $25. Most plans allow account owners to contribute $300,000 (or more) per beneficiary over the lifetime of the account.2


Wide Range of Schools

529 savings can be used at most accredited two- and four-year colleges and universities and vocational schools, including many outside the U.S. In addition, up to $10,000 per year per beneficiary can be used for tuition for eligible public, private and religious primary and secondary educational institutions (K-12). At this time, it is not clear what, if any, expenses will be regarded as “tuition” in the case of public schools.1


No Income Restrictions

Anyone can open a plan regardless of his or her income.


Multiple Investment Options

Most 529 plans offer a wide range of investment choices allowing you to invest your assets in the portfolio(s) that best suit your education savings goals.



Many 529 plans offer features that make it a convenient way to save for college, including monthly automatic investment plans and portfolios that automatically rebalance as the beneficiary gets closer to college.


Earnings Grow Tax Free

Earnings grow federal income tax-free, and earnings are free from federal income tax when withdrawn for qualified higher education expenses or used up to $10,000 per year for tuition for eligible primary and secondary schools.1


Estate Planning

Five years worth of gifts (up to $75,000 for an individual or $150,000 if a married couple) can be made at once to a 529 plan without owing federal gift tax, as long as no other gifts are made to the same beneficiary over the five years.
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