What is a 529 Plan?

A 529 Plan is a tax-advantaged investment account that allows almost any adult—a parent, guardian, grandparent, relative, or even a friend—to help pay education expenses.

The basics of a 529 Plan

Who can open a 529 Plan?

Just about anyone can open and contribute to a 529 Plan, but you must meet the following guidelines:

  • You are at least 18 years old
  • You possess a Social Security number or a tax identification number
  • You have a permanent legal U.S. mailing address

As long as you meet those three rules, you can open a 529 Plan for any student of any age. You don’t even have to be related to the student, and you can open the account for yourself, too!

Who can be the account owner?

The money is owned and controlled by the person who sets up the account, not the beneficiary. You can also change the original beneficiary to a member of your immediate or extended family, including siblings, grandchildren, nephews, nieces, cousins and more.

Who can contribute?

Just about anyone—a family member, a friend, even yourself—can contribute to a 529 Plan. You can also use Spryng to crowdfund your account. Designed exclusively for Franklin Templeton 529 College Savings Plan account owners, Spryng is a personal crowdfunding tool designed to make saving for education easier.

Is there a contribution limit?

Unlike many other tax-advantaged accounts, like IRAs and 401(k)s, there are no annual contribution limits on 529 Plans. With most plans, account owners can contribute $300,000 or more per beneficiary over the lifetime of the account.

The overall balance of the account cannot exceed the expected cost of the beneficiary's qualified higher education expenses, which vary by state. Check with your tax or financial professional or the administrator of your state’s 529 plan.

Is there an earnings limit?

There are no income limits on those who contribute to the account.

What are the benefits of a 529 Plan?

Tax Advantages

The money in the account grows federal income tax-deferred, and when you’re ready to use the money, if withdrawn for qualified expenses it is free of federal taxes though state taxes and penalties may apply. Some states even offer a deduction on their state income taxes for contributing to a 529 Plan, but be sure to check this first with your tax or financial professional or the administrator of your state’s 529 Plan.

You may also make five years’ worth of gifts (up to $75,000 for an individual or $150,000 for a married couple) to a 529 Plan without owing federal gift tax. However, you cannot make any other gifts to the same beneficiary over the next five years.

Additionally, up to $10,000 may be paid toward principal or interest of a student loan for the beneficiary or sibling.1


Funds in a 529 Plan can be used to pay for qualified education expenses at most accredited two- and four-year colleges, universities and vocational-technical schools, including many outside the U.S., as well as certified apprenticeships.

Qualified education expenses may include mandatory fees, supplies, books, or other required equipment, and room and board, if enrolled at least half time. Funds can also be used to pay for tuition at eligible public, private and religious K-12 schools, up to $10,000 per year per beneficiary.1

Professional Management

By selecting portfolios that automatically adjust, you can invest in funds actively managed by Franklin Templeton. These age-based asset allocations move into more conservative portfolios as college nears.

For those who prefer a more active role in selecting their investments, you can customize your own portfolio based on your investment strategy and individual preferences. You can open an account for as little as $25, and there is no annual maintenance fee or sales charges. You can also set up an Automatic Investment Plan and contribute as little as $25 a month.

Can You Save for Retirement & College?

When asked, most people say that retirement is their number one investment goal. While financing education may not seem like a retirement issue, for many people – especially those with children – financing college is a top investment goal that ultimately intersects and competes with their retirement saving efforts. To prevent one effort from undermining the other, incorporate education financing into retirement planning. Successfully investing for retirement requires the right investments and the right plan. Remember to address the various challenges that may arise such as the type of retirement desired, accounting for long-term income needs, preparing for medical expenses, and financing education costs. Take small steps.

529 Investment Options

The plan offers three investment strategies designed to meet your individual investment needs. 2

Age-Based Asset Allocations – portfolios based upon the beneficiary’s age, which are periodically reallocated. 3

Objective-Based Asset Allocations – portfolios designed to reflect the amount of risk you are comfortable taking, and the potential return characteristics you prefer.

Customized Strategy – choose from one or a combination of individual portfolios that range from growth allocations to more conservative income portfolios.

Gifting Options

Designed exclusively for Franklin Templeton 529 account owners. Spryng is a personal crowdfunding tool designed to help meet the increasing cost of education. It takes just a few minutes to set up a Spryng account and share with friends and family.

Get started with Spryng today

Value of a financial professional

Having a college savings plan can be key to success.

Start the conversation with a financial professional on your college savings goals.

Questions to ask your financial professional

Whether you have been working with a financial professional for years or just starting to look for one, here are questions to help start the conversation.

  1. What are the different ways to save for college?
  2. What is the difference between a taxable, tax-deferred and tax-free account?
  3. Are there any state-specific benefits?
  4. What are the best investments options for my individual situation?
  5. How can I save for retirement and for college expenses at the same time?

Next Steps

Open an Account

What do I need to open an account?

  • SSN/Tax ID Number
  • U.S. Address
  • Email Address
  • Date of Birth
  • Checking or Savings Account Number
  • Bank Routing Number

529 Plan Resources