How to Open a 529 Plan: Tips

Right now, every parent needs a plan to save for their child's education. Take a look at the Laurel Highlands Wealth Advisory Group's guide on how to open a 529 plan the easy way.
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It should be unsurprising to hear that the average college education isn’t exactly affordable these days. With that in mind, there’s no better time to begin saving for your child’s college education than the present. And to maximize your efforts to save for college, you’ll need an investment plan built with that purpose in mind.


Currently, one of the most popular college savings plan options out there is the 529 plan. These plans are in demand right now because they come with appealing benefits, including withdrawals for educational expenses and investment growth unimpeded by taxes. But before you start working to open one of these plans, it’s wise to read a quick how-to. Open a 529 plan with help from the experts at Janney—here, you’ll find our complete guide to this process.

Here’s How to Open a 529 Plan

Obviously, you won’t be able to establish a college savings plan if you haven’t taken any time beforehand to understand how. To open a 529 plan, simply follow these steps:


  1. Choose a plan. Generally speaking, 529 plans are offered by each state, but that doesn’t mean you’re locked into where you live. Instead, you can open 529 plans from another state (though you may be eligible for tax incentives by picking your local plan).
  2. Decide on a plan type. The two basic types of 529 plans are individual and custodial accounts. Individual accounts are owned by an adult (a child’s parent, in most cases). Meanwhile, custodial accounts are actually owned by the children benefiting from them, and another party manages these plans until their beneficiaries come of age.
  3. Formally apply to open a plan. There are several ways to do this, such as downloading an enrollment kit from your 529 plan of choice. In most cases, you’ll need to provide the names of the account owner and beneficiary, as well as a few pieces of personal information about both parties (such as Social Security numbers, dates of birth, and contact information). 
  4. Start funding your new plan. With your 529 plan officially in place, it’s time to start moving money into it. You can do this by sending a physical check to the plan, electronically transferring funds from your bank account, or scheduling automatic payments.
  5. Select 529 plan investments. Unlike some investment plans, you won’t have too many choices to make when picking investments for a 529 plan. You might be able to choose between conservative, moderate, or aggressive age-based portfolios, among a few other investment options.

Where to Open Your Plan

Because you can open a plan in any state, you’ll want to look at the options carefully. Each state’s 529 plan offers the same base benefits, but there are several aspects that can vary:

  • Location. You might want to choose a specific state’s 529 plan for a few different reasons. Usually, this involves getting tax breaks or wanting to have your 529 plan in the same state where your child goes to college.
  • Performance. Most 529 plans are administered by financial institutions that have teamed up with the state offering the plan in question. If you don’t choose your own investment strategy for your 529 plan, make sure a trustworthy institution administers your plan.
  • Expenses. Some 529 plans come with higher costs than others, so make a point of doing your research before opening a plan.

All About 529 Plan Contribution Limits

As is the case for many other investment plans, 529 plans have some limitations on how much money you can put into them. Unlike traditional/Roth IRAs, however, these plans do not have fixed limits imposed by the IRS. Instead, the rules simply state that your contributions can’t exceed your child’s actual education expenses.


Along with that, it’s essential to keep the gift tax exclusion in mind when contributing to a 529 plan. Suppose you inadvertently earmark more than this amount for a single beneficiary in a single tax year. If you do, your contributions may cause negative gift tax-related effects. But since most people won’t need to contribute in excess of $17,000 (the gift tax exclusion for 2023) to meet their 529 plan savings goals, this probably won’t be a concern for you.

Get More College Savings Advice from the Experts

Knowing how to open a 529 plan is more than just helpful knowledge for parents. It could make the difference between having a sound investment strategy in place for your child’s educational future, and scrambling to find enough money for their college education months before they graduate from high school.

But even if you find yourself in the latter situation, there’s no need to panic. Janney’s Financial Advisors know all about funding college educations, so we can give you valuable assistance no matter where you are in this process. Don’t wait any longer—contact a Financial Advisor to chat today!

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