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How do I save for a child's college education in the US?
Use the '2K rule' to save for your kid's college educationFidelity recommends you multiply your child's age by $2,000 to figure out how much you should save.A tax-advantaged 529 plan can boost your college savings.The average 529 plan investor has more than $32,600 in their account when their scholar reaches age 17.
What is a 529 plan?
A 529 plan is a tax-advantaged investment vehicle in the U.S. designed to encourage saving for the future higher education expenses of a designated beneficiary.
How does a 529 plan work?
A 529 college savings plan is a specialized savings account that is used to save money for college. ... The money in a 529 plan may be used to pay for the college expenses and K-12 tuition of the beneficiary, tax-free.
What are the main advantages of a 529 plan?
529 plans offer unsurpassed income tax breaks.Although contributions are not deductible, earnings in a 529 plan grow federal tax-free and will not be taxed when the money is taken out to pay for college.
What about disadvantages of a 529 plan?
Disadvantages of 529 PlansLimited Investment Options. ...The Fees May Be High. ...A 10% Penalty Applies to Non-Qualified Withdrawals. ...Time Isn't Always On Your Side.
How long have 529 plans been around?
Congress created them in 1996 and they are named after section 529 of the Internal Revenue code. “Qualified tuition program” is the legal name.
What are the types of 529 plans?
There are two main types of 529 plans: the college savings plan and the prepaid tuition plan.
What can the 529 plans funds be used for?
Money saved in a 529 plan can also be used to pay expenses associated with college or other post-secondary training institutions. ... While funds from a 529 account can be used to pay for expenses required for college, not all expenses qualify.
What happens if the 529 plans funds are not used?
If you truly have no other use for your leftover 529 plan savings, you can always take a non-qualified distribution. Your contributions will never be taxed or penalized, since they were made with after-tax dollars.

Question: How does a ESA compare
Self-contained rewrite: How does a ESA compare to a a 529 plan?