Setting Up a 529 Plan for College Savings: A Guide for Non-Contributors

Planning for your child’s future is a significant responsibility, and one of the most effective ways to ensure their financial stability is by setting up a 529 plan for college savings. This tax-advantaged savings plan is designed to encourage saving for future education costs. But what if you’ve never worked or contributed money to a 529 plan account? Can you still set one up for your child? The answer is yes, and this guide will walk you through the process.

Understanding the 529 Plan

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1996. There are two types of 529 plans: prepaid tuition plans and education savings plans. Both types offer tax benefits, but they function differently.

Who Can Open a 529 Plan?

Anyone can open a 529 plan, regardless of their income level or employment status. This includes parents, grandparents, other relatives, and even friends. The person who opens the plan is known as the account owner, and they retain control over the account, including how the funds are used.

How to Set Up a 529 Plan

  1. Choose a Plan: You can choose any state’s 529 plan, not just your own. Compare the features of different plans to find one that suits your needs.

  2. Open an Account: You can open an account online or by mail. You’ll need to provide some personal information, including your Social Security number and date of birth.

  3. Name a Beneficiary: The beneficiary is the person who will use the funds for their education. This can be your child, grandchild, or even yourself.

  4. Make Contributions: You can start contributing to the plan as soon as it’s open. There are no income restrictions or annual contribution limits, but there is a lifetime limit which varies by state.

Using the 529 Plan Funds

The funds in a 529 plan can be used for a wide range of education-related expenses, including tuition, room and board, books, and other supplies. The funds can be used at any eligible educational institution, which includes most colleges and universities, as well as many vocational and technical schools.


Setting up a 529 plan for college savings is a smart move for anyone who wants to help a child pay for their education. Even if you’ve never worked or contributed money to a 529 plan before, you can still open an account and start saving for your child’s future today.