Ahh! Summertime Savings with a 529
Summer has arrived and it's the season of road trips, popsicles, pool days … and, surprisingly, smart financial moves. While others might be chasing the next beach towel sale, savvy families can use this fun season to make a long-term investment that will last far beyond Labor Day: a 529 savings plan with The Education Plan®.
It was the summer of 1996 and the hit tune and dance for that matter, was "Macarena"! This was also the summer that our nation's 529 education savings program was created by Congress as a tax-advantaged way to help families save for and afford college. Just as music and dance have evolved, the 529 has broadened the benefits and uses so that families can use their savings for many more educational needs. Today's 529 can be used for K-12 expenses (up to $20,000 a year), college tuition, including room and board, apprenticeship or trade school expenses, and now even professional education expenses such as continuing education, accreditation, or licensure. The list of qualified uses is as long as a summer day.
Summer sparks imagination. Kids talk about becoming astronauts, veterinarians, engineers or video game designers. By opening an account with or contributing to The Education Plan, those dreams can become reality. As we say, "A little today goes a long way," as even small contributions today can grow over time and help pay for expenses later.
Family gatherings are sure to happen, and grandparents, aunts, uncles, and family friends often ask, "What can we get the kids this summer?" Instead of another plastic pool toy, consider inviting loved ones to contribute to a child's 529 account through the U-Gift program. Those gifts, and all contributions to The Education Plan, can offer an income tax deduction for New Mexico taxpayers.
Teppie, The Education Plan's lovable mascot, has visited several towns and special events this early summer to share the benefits of a 529 plan and help build educational dreams for the future. In the meantime, take 10-15 minutes to start your child's 529 with The Education Plan today!
Frequently Asked Questions
A 529 plan is a tax-advantaged investment account that is designed to grow savings for future education expenses for a specified beneficiary. 529 plans offer unique benefits and features that make them an appealing strategy for education related saving.
A 529 plan can be used for “qualified educational expenses.” For federal tax purposes, qualified educational expenses include:
- Tuition and fees at accredited higher education institutions
- Books
- Supplies and equipment
- Room and board for beneficiaries attending on at least a half-time basis.
- Computer technology, equipment, and internet access
- Up to $10,000 a year for K-12 tuition and expenses (Limit increase to $20,000 in 2026)
- Expenses for educational special needs services
- Transfers to an ABLE account for the beneficiary (transfer subject to annual limit)
- Apprenticeship expenses
- Up to $10,000 for student loan repayment
- Credentialing expenses and certification programs
- Roth IRA rollover for the beneficiary
If you're not sure if an expense is considered "qualified," we recommend consulting with a tax professional or advisor. Unqualified expenses will be treated like ordinary income: state and federal taxes will apply, with a 10% federal penalty for withdrawals from your 529 plan used to pay for them.
New Mexico residents can deduct contributions to The Education Plan from their state taxable income each year. This includes contributions made to an account that you are not the account owner of.
You cannot deduct contributions from federal income taxes.
Any person at least 18 years old with a valid Social Security Number (SSN) or Tax Identification Number (TIN) can open a 529 account. The account holder chooses the investment options, designates a beneficiary, and requests the distribution of funds.
The cost of college continues to rise, including tuition, housing, food and supplies, so it’s important to begin saving as soon as possible. You can learn more about how much a typical college education costs on our Cost of College page. It’s never too early or too late to start.
The Education Plan offers a variety of investment options to fit you and your family’s needs, risk tolerance and goals. You can see all of the available investment portfolios on the investments page.
Yes, you can use up to $20,000* a year to cover tuition and expenses for K-12 education.
Qualified K-12 expenses include:
- Tuition (public, private, and religious)
- Curriculum materials, books (including digital/online) and instructional materials
- Tutoring and instructional classes**
- Fees for a nationally standardized norm-referenced achievement test, an advanced placement examination, or any examinations related to college or university admission
- Dual enrollment program fees
Educational therapies for students with disabilities provided by a licensed or accredited practitioner or provider, including occupational, behavioral, physical, and speech-language therapies
*Starting in tax year 2026. The annual limit is $10,000 in tax year 2025 and permitted for tuition only.
**Tuition for tutoring or educational classes outside of the home, including at a tutoring facility, but only if the tutor or instructor is not related to the student and—
(i) is licensed as a teacher in any State,
(ii) has taught at an eligible educational institution,
or (iii) is a subject matter expert in the relevant subject.
You can open an account with The Education Plan online or by mailing in the enrollment form. In order to open an account, you will need the following information:
- Your social security number or TIN
- Your address
- Your bank account information (in order to fund the account)
- The beneficiary’s social security number or TIN
- The beneficiary’s birthday
-The beneficiary’s address
