What is a 529 plan? How does it work?

A 529 plan is an account specifically designed to help you save for college or K-12 education-related expenses. Using a 529 can make it much easier to reach your savings goal. You make contributions to your plan using after-tax dollars, but earnings are tax-deferred while invested and tax-free when used for qualified higher educational expenses such as tuition, fees, room and board, books, supplies, computer technology, and equipment as well as certain expenses for special needs students.+

Here’s how it works. You contribute to an account that you control on behalf of a specific beneficiary. You can withdraw the money tax-free anytime—as long as it’s used to pay for qualified educational expenses at any eligible private or public college, university, graduate school, or vocational school anywhere in the U.S. 529 plans can also be used tax-free to cover certain tuition expenses at K-12 public, private, and religious schools+.

When you save with a 529 plan, you may also be eligible for a state income tax deduction depending on your state of residence. If you live in Arizona, Kansas, Maine, Minnesota, Missouri, Montana, or Pennsylvania, contributions to any 529 plan are eligible for the state's income tax deduction. State tax or other benefits should be one of many factors to be considered prior to making an investment decision. 

Why the T. Rowe Price College Savings Plan?

Getting started is easy.

Opening a T. Rowe Price College Savings Plan account is the first step in helping to make higher education more affordable for a child. Open your college savings plan account today with as little as $50 a month or a $250 initial contribution.

It’s your money. You can use it whenever and however you want.

You always have access to the savings in your account for anything that life throws your way. Flexibility like this is why our plan suits nearly every budget or savings goal.

  • Change beneficiaries without penalty
  • No time restrictions on your account
  • Increase or decrease contributions
  • Your contributions to the plan are never taxed or penalized
  • No annual account fee
  • As an added benefit for those interested in attending the University of Alaska, participants with an active account for two or more years may be eligible for resident tuition rates without regard to residency.

Anyone can enroll and contribute to your T. Rowe Price College Savings Plan account.

It’s a great way to save for college whether you’re a grandparent, family member, or family friend. There are no limits on age, income, or relationship with the beneficiary. You can invest any amount up to the account balance maximum of $475,000 per beneficiary.

If you’d rather not open an account of your own, you can make a gift contribution to any child’s college savings plan with the GoTuition® gifting portal.

The gift of education is the perfect present for every child’s future.

Investing is easy with portfolios designed to help you meet your education savings goals.

The Enrollment-Based Portfolios are targeted to an expected school enrollment date. They start out invested more aggressively - with a focus on stock funds - then adjust over time with more of a focus on bond funds in an effort to reduce risk as the target date nears.

Our Static Portfolios offer a fixed strategy, which means the underlying allocation does not change over time.

We are committed to helping families plan and save for future education expenses. That’s why we offer tools and resources that help you plan and prepare for your child’s academic future.

  • GoTuition® gifting portal: An online tool that makes it easy for you to ask friends and family to contribute to your child’s 529 plan in lieu of gifts for traditional celebrations such as graduation, holidays, and birthdays.
  • Account Performance Summary Videos: A personalized video that details your current savings, account details, and how to save more for college.
  • Education Planning Center: An online tool that makes it easy to see a focused view of your college savings progress and provides information on financial aid, scholarships, and grants.

It’s your money. You can use it whenever and however you want.

With nearly 20 years of providing college savings guidance, the T. Rowe Price College Savings Plan is a national plan with a solid record of investment performance.

  • Morningstar awarded the T. Rowe Price College Savings Plan a "Silver" rating in 2018*.
  • Savingforcollege.com ranked the T. Rowe Price College Savings Plan in the top 10 for three- and 10-year periods as of 9/11/19.

Right Now Is the Right Time to Start Saving

Test Your Knowledge

Are you a 529 plan genius? Test your 529 plan knowledge.

GoTuition is a trademark of T. Rowe Price Group, Inc.

The availability of tax benefits may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors as applicable

529 plans vary from state to state, and each has somewhat different costs, investment options, and tax incentives. In addition, an account holder may have limited investment options, depending on the particulars of the plan you select. When choosing the plan that works for your goal, compare the features of your state’s 529 plan with others to weigh the plan benefits.

Each quarter, Savingforcollege.com analyzes the investment performance figures for thousands of 529 portfolios, comparing the reported investment performance of a subset of portfolios from each 529 savings plan to produce their rankings.

Portfolios from direct-sold 529 plans are assigned to a specific asset-allocation category. Within each category, portfolios are compared and ranked based on published investment returns. Separate rankings are produced for different performance periods (one-year, three-year, five-year, and 10-year investment periods). An overall (or "composite") performance score is calculated for each 529 plan for a given performance period based on the plan's performance rankings for each asset-allocation category, taking into account the varying returns among the different asset-allocation categories. To produce the composite ranking for a plan, the plan’s composite performance score is compared to the composite performance scores of all other 529 plans.

Past performance cannot guarantee future results. Current performance may be lower or higher than performance results used for these rankings, resulting in different rankings that may be lower than those shown.

+While distributions from 529 college savings plans for elementary or secondary education tuition expenses are federally tax-free, state tax treatment will vary and could include state income taxes assessed, the recapture of previously deducted amounts from state taxes, and/or state-level penalties. You should consult with a tax or legal advisor for additional information.