• 529 Plans
    529 Plan Ratings and Rankings
    • Best 529 plans of
    • Top 10 performance rankings
    • 5-Cap Ratings
    • 529 fee study
    Choosing a 529 Plan
    • Your state's 529 plan
    • Compare 529 plans
    • 529 plan investment options
    • Enroll in a 529 Plan
    • Find a 529 Pro
    • 529 news
    Resources
    • Articles
    • 529 Tutorial
    • Book: Complete Guide to College Savings
    • eBook: Family Guide to College Savings
    • Newsletters
    • Webinars
    • Q&A message board

    Best 529 plans for your child

    Get started
  • College Savings 101
    How to Save for College
    • What is a 529 plan?
    • College Savings Center
    • Grandparents' guide to 529 plans
    • 529 Plans and K-12
    Other Savings Options
    • 529 plan vs. Roth IRA
    • Coverdell ESA
    • 529 ABLE Accounts
    • Compare Savings Options
    Tools and Calculators
    • College Savings Calculator
    • 529 Savings for Private K-12 Tuition
    • Is your Institution 529 Eligible?
    • 529 Savings vs. Loans Calculator
    • See all calculators

    Learn about 529 plans

    Get started
  • Student Loans
    Ratings and Reviews
    • Best student loan refinance companies
    • Best private student loans
    • Best private student loans for parents
    • Best private student loans for grad school
    • Student loan reviews
    Paying for College
    • 529 withdrawals
    • Financial Aid
    • What is the FAFSA?
    • Scholarships
    Tools and Calculators
    • Financial Aid Calculator
    • Loan Calculator
    • Loan Comparison Calculator
    • Student Loan Prepayment Calculator
    • Loan Refinance Calculator
    • Income-Based Repayment Calculator
    • Income-Contingent Repayment Calculator
    • Pay-As-You-Earn Repayment Calculator
    • Revised Pay-As-You-Earn Calculator
    • Trust Fund Calculator
    • See all calculators

    Best options for student loan refinance

    See rates
  • For Professionals
    Advisor Resources
    • Pro Dashboard
    • 529 performance rankings
    • Portfolio fee & performance lookup
    • Practice building resources
    Tools and Calculators
    • Pro 529 Evaluator
    • State Tax 529 Calculator
    • The Price of Procrastination Calculator
    • Family College Savings Road Map
    • Savings & Borrowing Funding Tool
    • 529 Superfunding Calculator
    • UGMA/UTMA 529 Conversion Calculator
    Subscriptions
    • Subscribe
    • Support

    Grow your practice with 529 plans

    Learn more
  • Search
Get Started
  • 529 Plans
    529 Plan Ratings and Rankings
    • Best 529 plans of
    • Top 10 performance rankings
    • 5-Cap Ratings
    • 529 fee study
    Choosing a 529 Plan
    • Your state's 529 plan
    • Compare 529 plans
    • 529 plan investment options
    • Enroll in a 529 Plan
    • Find a 529 Pro
    • 529 news
    Resources
    • Articles
    • 529 Tutorial
    • Book: Complete Guide to College Savings
    • eBook: Family Guide to College Savings
    • Newsletters
    • Webinars
    • Q&A message board
  • College Savings 101
    How to Save for College
    • What is a 529 plan?
    • College Savings Center
    • Grandparents' guide to 529 plans
    • 529 Plans and K-12
    Other Savings Options
    • 529 plan vs. Roth IRA
    • Coverdell ESA
    • 529 ABLE Accounts
    • Compare Savings Options
    Tools and Calculators
    • College Savings Calculator
    • 529 Savings for Private K-12 Tuition
    • Is your Institution 529 Eligible?
    • 529 Savings vs. Loans Calculator
    • See all calculators
  • Student Loans
    Ratings and Reviews
    • Best student loan refinance companies
    • Best private student loans
    • Best private student loans for parents
    • Best private student loans for grad school
    • Student loan reviews
    Paying for College
    • 529 withdrawals
    • Financial Aid
    • What is the FAFSA?
    • Scholarships
    Tools and Calculators
    • Financial Aid Calculator
    • Loan Calculator
    • Loan Comparison Calculator
    • Student Loan Prepayment Calculator
    • Loan Refinance Calculator
    • Income-Based Repayment Calculator
    • Income-Contingent Repayment Calculator
    • Pay-As-You-Earn Repayment Calculator
    • Revised Pay-As-You-Earn Calculator
    • Trust Fund Calculator
    • See all calculators
  • For Professionals
    Advisor Resources
    • Pro Dashboard
    • 529 performance rankings
    • Portfolio fee & performance lookup
    • Practice building resources
    Tools and Calculators
    • Pro 529 Evaluator
    • State Tax 529 Calculator
    • The Price of Procrastination Calculator
    • Family College Savings Road Map
    • Savings & Borrowing Funding Tool
    • 529 Superfunding Calculator
    • UGMA/UTMA 529 Conversion Calculator
    Subscriptions
    • Subscribe
    • Support
  • Icons / Search / Black Search
CLOSE
Close

Who are you saving for?

Knowing this helps us better customize your experience

Yes
No
I’m not sure

Knowing this helps us better customize your experience and offer better recommendations


NEXT

Knowing this helps us better customize your experience

My child(ren)
My grandchild(ren)
My Client
Other

Knowing this helps us better customize your experience and offer better recommendations

Sorry, child information is required.
I am saving for
The youngest child I'm saving for is
NEXT

Knowing this helps us better customize your experience and offer better recommendations

Please select an option

Learn
LEARN

I want to learn more about college savings

Open a plan
OPEN A PLAN

I'm ready to open a 529 plan

Grow
GROW

I want to accelerate my 529 plan savings



NEXT
I want to learn more about college savings
I'm ready to open a 529 plan
I want to accelerate my 529 plan savings
Your information will not be shared

Get FREE access to:

  • Track your child’s 529 plan growth and performance

  • Notifications to help you better manage your child’s 529 plan

  • Tips on how to accelerate the growth of your child’s 529 plan

CONTINUE

Many 529 plans offer gifting platforms to allow friends and family to contribute.

Yes
No

Save time by skipping steps you’ve already completed.

I haven't started saving at all
I'm setting money aside, but not with a 529 plan
I'm saving with a 529 plan for at least one child
Google Logo
LOG IN WITH GOOGLE
OR USE YOUR EMAIL
Show
Forgot your password?
LOG IN

Enter your email address to begin the reset password process.

Once entered, we will send a reset link to the email address you specified. If you use a mail filtering tool make sure you allow email from support@savingforcollege.com prior to submitting the request.


RESET MY PASSWORD
Log In

Enter your e-mail address and password to login. For security, we track login attempts.

Forgot your Password?

Don't have an account? Sign Up

Reset Password

Enter your e-mail address to begin the reset password process.

Once entered, we will send a key to the e-mail address you specified. If you use a mail filtering tool make sure you allow email from support@savingforcollege.com prior to submitting the request.



Nevermind. Go Back

Home > College savings 101 > Expert Q&A > What are the steps involved in setting up a 529 account? (Script)

What are the steps involved in setting up a 529 account? (Script)

By: Savingforcollege.com
September 15, 2014
Facebook Share
Twitter Share
Email Share
Print
CLOSE

Unlock Printing

Already have an account?  Log in

Print

Q:

What are the steps involved in setting up a 529 account? Watch video

A:

Hi, I'm Kathryn Flynn. If you're thinking about starting a college fund for your child or grandchild, you’ve come to the right place. During the month of September we're celebrating College Savings Month with a new podcast series on "Getting Started with 529 Plans". Our first episode focused on finding the best plan to suit your needs. Be sure to check it out on the Savingforcollege.com blog if you haven't already. If you're still deciding on a 529 plan – check your home state's plan first, some states are offering incentives for residents who open an account this month. We have a great list of all current promotions - also on the SFC blog.

Once again I'm here with Joe Hurley, CPA, Bestselling Author, Founder of Savingforcollege.com and our very own 529 Guru, and today we'll be discussing how to set up a 529 account.

So now that we've informed our listeners on how to find the best 529 college savings plan to suit their needs, what is the first thing they should do as far as setting up their account?


Before you enroll in a plan, you really should read the official program disclosure statement. It can be a fairly intimidating document but the PDS is the only place you will find all of the program rules, contribution and withdrawal procedures, investment options and information on the fees and expenses you'll pay for that particular plan. Remember, no two plans are alike so If you decide to skip reading the PDS entirely you'll have no grounds for complaining later on about missing important details concerning your plan.

I can see why that would be so important. Where would someone find the program disclosure statement?

They are always part of the program application packet and can usually be downloaded from the plan's website.

Okay, so what next?

Well, the next thing you'll need to do is name the account owner. You'll most likely name yourself as the owner, but know that very few plans permit joint ownership, so your spouse may want to open an account as well.

Unlike UGMA/UTMA custodial accounts, it's the owner of a 529 account that retains control of the assets – not the beneficiary. But if the funds are going to be sourced from an existing UGMA or UTMA account, you'll need to preserve the minor's ownership rights by designating it as a "custodial 529" account. It is also possible for corporations, trusts and other legal entities to be account owners.


You wouldn't name the child as the account owner?

The person who will eventually be using the funds would be named as the beneficiary, whether that's your child, yourself or someone else. Many parents and grandparents appreciate the fact that the child is not the account owner. This way, they can rest assured that the money will be used toward its intended purpose – paying for college.

Another nice thing about 529 plans is that you can easily change the beneficiary without any tax consequences. So let's say your child gets a scholarship and doesn't need all of the money you saved. You can simply change the beneficiary to a younger sibling or someone else who is planning to attend college so that you can still take full advantage of the tax benefits. This could also come in handy if for some reason your child decides not to go to college.

Remember that to take full advantage of the tax benefits of a 529 plan the beneficiary must incur qualified higher education expenses, which can include tuition, room and board, books, fees, supplies and equipment and even computers if the school requires them. Non-qualified withdrawals will incur income tax and 10% penalty tax on account earnings, so if the original beneficiary doesn't use the funds remember that you can change the beneficiary and pass the money along to someone else who will.

To designate a beneficiary, you'll need their social security number, birth date and current address. If you're setting up a college fund for a child who isn't born yet, you can name yourself as the beneficiary and make the change once the child is born. This is a great way to jump-start your savings.


So what happens to the account if something were to happen to the account owner? Would the beneficiary get control?

The account application will ask you to name a successor owner. This is the person who will take over the account in the event of your death or incapacity. If this were to happen, the successor owner will take control over the account, giving them the right to request distributions for college, replace the beneficiary or even revoke the account assets.

If you don't feel comfortable leaving this responsibility with anyone else, you can always set up a legal trust to be the successor owner. You can leave explicit instructions for the trustee on how to handle the 529 funds in your absence.


I’m guessing the next thing to do is make a deposit. How do I know how much to contribute?

The dollar amount of your initial contribution will depend on your own situation and the plan you selected. Some plans have minimum dollar amounts for initial contributions, ranging from $15 to $1,000. Many plans will allow for a smaller initial contribution if you sign up for automatic monthly investments or if you open the plan through your employer.

Another great thing about 529 plans is that many will allow you to link a checking or savings account so that automatic contributions can be set up easily – allowing you to "set it and forget it". Most people who set up automatic contributions get so used to saving that they don't even miss the money they put away.

Don't forget to include other family members. Contributions to a 529 savings plan make great holiday and birthday gifts. In fact, with the holiday season only a few months away you might want to get that discussion started sooner rather than later.


Once again that was extremely helpful – thanks again Joe. What a great idea to ask for help from family members. Even a small contribution can grow over time and would be a much more meaningful gift than another toy or outfit.

Well, so far you’ve helped us with picking the right plan and getting it set up. Next time we’ll talk about how to maximize our savings in a 529 plan to ensure we are ready when its time for college. From what I hear, it can really sneak up on parents!


Ready to open a 529 plan? Start comparing plans.


Popular Questions

  • Q: Two kids, two 529 plans?March 7, 2018
  • Q: Coverdell ESA vs. 529 Plan: Which to choose? (Script)March 7, 2018
  • Q: Top 529 Plan Withdrawal Tips. (Script)March 30, 2017
  • Q: Top 529 Plan Withdrawal Tips. (Video)March 30, 2017
  • Q: What are the 3 biggest 529 plan myths? (Video)March 17, 2017
  • Q: What are the 3 biggest 529 plan myths? (Script)March 17, 2017
  • Q: Does a 529 plan affect financial aid? (Video)March 16, 2017
  • Q: Does a 529 plan affect financial aid? (Script)March 16, 2017
  • Q: How much does college cost? (Video)March 15, 2017
  • Q: How much does college cost? (Script)March 15, 2017
  • Q: What Are The Top 7 Benefits Of 529 Plans? (Video)March 14, 2017
  • Q: What Are The Top 7 Benefits Of 529 Plans? (Script)March 14, 2017
  • Q: 529s and Financial Aid (Video)November 19, 2014
  • Q: 529s and Financial Aid (Script)November 19, 2014
  • Q: What are the best ways to maximize the savings in my 529 plan? (Video)October 14, 2014

Helping families save for college since 1999

Facebook iconTwitter iconLinkedin iconInstagram icon

Key Resources

  • 529 Plans
  • College Savings 101
  • Tools & Calculators
  • Student Loans
  • For Professionals

Our Company

  • Community
  • About us
  • Privacy
  • Contact us
  • For the media
  • Advertise
  • Sitemap

Join our email list

The latest articles and tips to help parents stay on track with saving and paying for college, delivered to your inbox every week.

Sign up

Frequently featured in

Frequently featured in

Saving For College is an unbiased, independent resource for parents and financial professionals, providing them with information and tools to understand the benefits of 529 college savings plans and how to meet the challenge of increasing college costs.

Copyright © 2023 Saving for College, LLC.

All Rights Reserved

444 Brickell Avenue, Suite 820 Miami, FL 33131

Phone: (585) 286-5426

SFC