529 basics

You're here because you want to see how a 529 plan can help you save for your child's future. First, you'll want to learn about the basics.

Defining 529s

What is a 529 savings plan?

It's a type of investment account you can use for education savings, which is usually sponsored by an individual state.

Where does the name come from?

It comes from Section 529 of the Internal Revenue Code, which specifies the plan's tax advantages.

What makes these little savings vehicles so powerful?

Tax savings. Your earnings grow federally tax-deferred,* qualified withdrawals are tax-free, and some states (like Missouri) have other tax benefits as well.**

Learn about MOST 529 tax benefits

Owners and beneficiaries

Who can open a 529 plan account?

Just about anybody can open a 529 account—parents, grandparents, other relatives, friends. As an account owner, you'll pick investments, assign a beneficiary, and determine how the money is used. You can also benefit from the state tax deduction if you're a Missouri resident.**

How much financial knowledge do I need to start investing in the plan?

There are options for every level of investor. Your choices will depend on how comfortable you are with risk and when you expect your student to need the money.

What's a beneficiary?

A beneficiary is the future student, or the person you open the account for. You can open an account for a child, grandchild, friend, or even yourself. The only rule is that the beneficiary must be a U.S. citizen or resident alien with a valid Social Security number or other taxpayer identification number.

What happens if the beneficiary doesn't want to continue his or her education?

If that's the case, you have a couple of options. You can stay invested in case he or she decides to attend school later (there's no age limit on using the money). Or you can change the beneficiary to an eligible family member.

You can also withdraw the money for other uses. A 10% penalty tax on earnings (as well as federal and state income taxes) will apply if you withdraw the money to pay for nonqualified expenses.

Using the money

How can I use the money in a 529 account?

When used for higher-education expenses at an eligible postsecondary school, money can be used to pay for tuition, as well as room and board (with limitations). Books, supplies, fees, and equipment that are required for enrollment or attendance are also qualified higher-education expenses. Computers, certain peripheral computer equipment, internet access and related services, and computer software are also qualified higher-education expenses if the items are to be used primarily by the student during enrollment or attendance at any eligible postsecondary school in the United States or abroad.

As of 2018, for federal tax benefit purposes, qualified expenses also include tuition of up to $10,000 per student per year in connection with enrollment or attendance at an elementary or secondary public, private, or religious school. In addition, Missouri taxpayers can use MOST 529 assets to pay for K–12 tuition, with no state tax consequences. State tax treatment of K–12 withdrawals is determined by the state where the taxpayer files state income tax. If you're not a Missouri taxpayer, please consult with a tax advisor.

Can 529 accounts only be used to pay for college?

No. Your 529 account can be used to pay for qualified education expenses at any eligible education institutions, including:

  • Post-secondary trade and vocational schools.
  • 2- and 4-year colleges.
  • Postgraduate programs.
  • K–12 public, private, and religious institutions (tuition only).

Does it matter what state the beneficiary's school is in?

No. Although you'll be investing in a 529 plan sponsored by Missouri, the student can attend any eligible education institution (including eligible trade schools) in the United States or abroad.

Getting started

How much does it cost to start?

There are no fees to open an account in the MOST 529 Plan.

How much can I invest?

529 account contribution limits are generally high—from $200,000 to $300,000 or more, depending on the state. For the MOST 529 Plan, you can contribute up to $325,000. This amount includes all Missouri-sponsored 529 savings accounts held for the same beneficiary.

What if I don't have time for this?

We can see how you might feel that way—most parents are pretty busy these days. But starting to save early can make a big difference, and opening an account only takes about ten minutes.

Need more information?

You can find more answers on our FAQs page. Or you can call us at 888-414-6678 Monday through Friday from 7 a.m. to 8 p.m., Central time.

What's next?