21 States Offer FDIC-Insured 529 Plan Options

Facebook icon Twitter icon Print icon Email icon
Kathryn Flynn

By Kathryn Flynn

October 5, 2023

A recent Saving for College study found that twenty-nine 529 plans offered by twenty-one states offer investment options that are insured by the Federal Deposit Insurance Corporation (FDIC), including high-yield savings accounts and bank certificates of deposit (CDs). FDIC-insured investments are suitable for families who want to preserve capital in their 529 plan without taking on excess risk.

What are FDIC-insured investments?

FDIC-insured investments are backed by the full faith and credit of the United States government up to certain limits in the event of a bank failure. This is an attractive feature for families with a short time horizon to invest. If a student is approaching college or has already started college, they can take advantage of the tax benefits and flexibility of a 529 plan without risking their principal investment. The same strategy works for families who use a 529 plan to pay for K-12 tuition.

FDIC-insured options within 529 plans are also a good option for families who are risk-averse. For example, parents and grandparents who witnessed their retirement accounts or other savings get wiped out by the Great Recession may be hesitant to leave their child’s education fund at the mercy of volatile stock and fixed-income markets.

Our study found that in 2023, FDIC-insured options are offering significantly higher yields than in the past, with 22 options yielding at least 4% net of fees as of June 30, 2023.

The states listed in this table offer at least one FDIC-insured investment option within a 529 plan.

States that offer FDIC-insured investment options within 529 plans

State
529 Plan
FDIC-Insured Investment Option
Alabama
Bank Savings Portfolio
Bank Savings Portfolio
Arizona
AZ Bank Deposit Portfolio
Arkansas
GIFT Plan Savings Portfolio
 
Savings Portfolio
Colorado
Money Market Savings Account
Connecticut
CT Bank Deposit Portfolio
Delaware
DE Bank Deposit Portfolio
Idaho
Savings Portfolio
Illinois
Bank Savings Portfolio
Bank Savings Portfolio
Indiana
Savings Portfolio
 
Savings Account
 
Savings Portfolio
Kentucky
Capital Preservation Option
Massachusetts
MA Bank Deposit Portfolio
Maine
NextGen Savings Portfolio
 
NextGen Savings Portfolio
Nebraska
Bank Savings
 
Bank Savings
 
Bank Savings
New Hampshire
NH Bank Deposit Portfolio
Nevada
Savings Portfolio
North Carolina
Federally Insured Deposit Account
Ohio
Fifth Third 529 Savings Account
Oregon
FDIC-Insured Option
South Carolina
Columbia Bank Deposit 529 Portfolio
 
Future Scholar Bank Deposit Portfolio
Utah
FDIC-Insured Option
Virginia
FDIC-Insured Option

Source: 2023 FDIC-Insured Products in 529 Plans, Savingforcollege.com

A good place to start:

See the best 529 plans, personalized for you

×