A 529 college savings plan is not a “last minute” option when a teenager is nearing high school gradation. In fact it is a long term savings vehicle for parents to prepare for their children’s future college needs. If parents begin saving early they can take advantage of the long term savings benefits and tax benefits offered by this program.
A 529 college savings plan is often operated by state governments and the rules for the plans vary by state. These plans are normally categorized as either prepaid or savings. Educational institutions can also offer a 529 plan, but it must be a prepaid plan not a 529 savings.
Parents can also take advantage of special tax benefits when participating in a qualifying plan. In fact the name 529 college savings plan is simply named after the Section of the Internal Revenue Code where it is found (Section 529). Again, the benefits are long term. Contributions to the plan are not deductible on your federal tax return. However the investment grows tax-deferred and when it comes time to take distributions to pay for college costs the money comes out of the account federally tax-free.
Some parents have the mistaken idea that state-sponsored 529 plans are only for families who plant to send their children to a state school. That idea is false because of the difference in the two types of 529 plans: prepaid programs and savings programs. States with prepaid tuition contracts that cover in-state tuition will allow you to transfer the value of your contract to private and out-of-state schools. Sometimes you may not get the full value of it though, depending on the state. Now if you choose a 529 savings program, the full value of your account can be used at any accredited college or university in the country.
Parents should start saving early for their children’s education. Using a 529 college savings plan is one option that makes it somewhat easier to begin saving early. Check with your state’s program for 529 college plans to see if it could be a good fit for you. | 
