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• 529 plans allow people to save money for a child's college expenses while also getting tax benefits such as tax free growth and tax free withdrawals. Some states also permit a state tax deduction or credit for contributions to certain 529 plans. 529 plans may or may not reduce the amount of financial aid a student is offered, depending on the methodology an individual school uses to calculate need and assets. The decision as to whether or not to save for college using a 529 plan depends on your personal circumstances.

• While some regulations for 529 plans are nationwide, others vary depending on the state. 529 plans are authorized by individual states, but you are not restricted to investing in a plan that is established in your own state.

1. Qualified withdrawals from 529 plans are tax-free.
2. Contributions are tax deductible in many, but not all states. In order to get the deduction however, you'll need to be contributing to a plan in the state you pay taxes in as a resident.
3. The owner of the account, whether a parent, grandparent or someone else, controls the assets in the account. The beneficiary can be changed, so if the child the account was originally set up for decides not to go to college, or gets a full scholarship, the account can be redirected to a younger brother or sister.
4. The money in the plan can be used to pay expenses at some foreign colleges.
5. Contribution limits are set by each state.
6. Several people can contribute to the plan, so grandparents can contribute to a 529 that parents established, for example.
7. Withdrawals for non-education expenses are taxable, and subject to a penalty.

• 529 plans can be opened directly through the state or through an investment broker. You can open a plan in your state, or in any state that offers a 529 plan. Two different types of 529 plans are available. Some states offer prepaid tuition plans, others offer college savings plans, and some offer both.

• After understanding how a 529 works, it's time to find out more about the available plans and decide on one.

1. Some states offer more than one plan, while others only have one type of 529 plan.
2. Different states offer different plans with different conditions and fees.
3. Carefully compare fees and conditions between plans. In some cases, even if your state offers tax benefits on its own plan, it may be more beneficial for you to enroll in another state's plan.
4. An investment broker can help you choose which plan is best for you, but opening one through a broker will be more expensive. A broker will charge a fee for their services on top of the fees charged by the state for the plan.
5. Research how well the investments in the plan are performing.
6. Decide on a plan.