Your 529 Account
Everything you need to know
Setting up a 529 account for someone is among the most meaningful ways to demonstrate your belief in their future. Congratulations on taking that step!
At The Education Plan, we’re here to support you throughout the journey, from your first contribution to the day you are ready to withdraw funds. Below are a few key things you should know about your new account, as well as helpful advice on how to grow it.
Managing Your Account
The easiest way to manage and update your account with The Education Plan is through our secure online portal.
- Manage who is associated with your account, including changes to your beneficiary.
- Review your account’s performance and update your investment options.
- Make contributions, request withdrawals and rollover funds from another plan.
- Access statements, confirmations and tax forms.
You can set up online access and log in here.
Tips for Growing Your Account
Kids are four times more likely to graduate college with just $500 saved toward education. And with the benefits of compounding interest, the sooner you start contributing, the more your account can grow. Putting away even a little today can go a long way toward a bright education in the future.
Here are our top three tips for reaching that $500 milestone and beyond.
1. Encourage Loved Ones to Contribute with Gifting
You don’t have to do it alone. One of the fastest ways to grow your account is to set up gifting through the Ugift program.
- Ugift will generate a unique, custom code for your account.
- You can share the code with loved ones who can easily contribute for birthdays, holidays and other special occasions.
- There’s no fee, and your account information remains secure.
- Grandparents, friends and family members love contributing, and it’s a gift a child will never outgrow or forget. We put together tips for asking for a 529 gift to make it even easier.
To set up gifting, log in to your account and navigate to the Ugift tab on the right side of the page.
This hypothetical example assumes a 5% annual rate of return on a $25 monthly contribution into a 529 college savings account over 18 years (total lifetime contribution of $5,400). When compounded every year at the same rate of return, the account could grow by 64% and be worth $8,730. The extra $3,330 is the benefit of compounded growth. This chart is for illustrative purposes only and does not represent the performance of any specific account or investment and does not reflect plan costs or sales charges that may apply. If such costs or sales charges had been taken into account, returns would have been lower.
2. Set It and Forget It
Just like with retirement savings, the simplest way to grow your 529 account is to set up automatic contributions that you don’t have to think about or remember.
With The Education Plan, it’s easy to set up automatic contributions at any frequency you are comfortable with and for as much or as little as you would like. Saving just $25 a month can lead to significant savings with the benefit of compounded interest.
3. Involve Your Child or Loved One
Start talking about the value of education early, and encourage your child or loved one to contribute to the account, too. Getting children excited about education while they are young will inspire them to value it throughout their life. It will also encourage them to contribute to the account on their own, giving them a sense of ownership and involvement in the saving process—and boosting the overall account balance.
Taxes – What You Need to Know
State Taxes
If you are a New Mexico resident (or reside in a state that allows a tax benefit for contributions to an out-of-state 529 plan), remember to claim the tax benefit for your contributions on your state income tax return each year. This is an important benefit of your 529 plan with The Education Plan and can generate significant savings.
Federal Taxes
When used for qualified educational expenses, earnings on your 529 account and withdrawals from it are not subject to federal taxes.
Getting More Out of Your Tax Refund
If you receive an annual tax refund, it can be tempting to spend on a single large, indulgent purpose. We get it! Instead, consider reinvesting your refund in your 529 account so it continues to grow and work for you. This is a simple way to grow your account every year.
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
