What is a 529?

A 529 account is an investment account that offers tax benefits when used to pay for qualified education expenses. 529 funds are invested and later used to pay for the beneficiary’s education expenses.

There are two types of 529 plans: 

Education Savings Plan: These plans allow account owners to invest their assets with the potential to grow over time. These funds can then be used on the listed beneficiary’s tuition and other education expenses outlined in the program plan description, which can be found on plan websites. Education Savings Plans can be Direct-Sold or Advisor-Sold. Betterment’s plan selection experience covers Direct-Sold plans.

Prepaid Tuition Plan:  This type of plan allows users to pay tuition costs for a specific school using today’s tuition rates. This option is not offered in many states, and Betterment does not currently support this type of 529 plan.