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What’s a 529?


It’s a tax advantaged education savings plan designed to help your child reach their full potential.

Here’s a quick look at 529 Plans. Contact us if you would like to talk through it.

What’s a 529 plan?

A 529 plan is a tax advantaged college savings plan designed to make post-secondary education more affordable for families. The Education Plan® is the name of New Mexico’s 529 college savings plan.

Why are 529 plans important for families?

Don’t be deterred by sticker shock. Financing a college education is a matter of combining several resources to accomplish the task. Not many families can afford the full cost of college. Paying for post-secondary education – college, vocational school, professional school or a graduate degree – usually involves a mix of:

  • Scholarships & Grants - Gift aid awarded based on a variety of factors, such as: demonstrated financial need, academic achievement, leadership and field of study
  • Need based Financial Aid - EFC (estimated family contribution) is subtracted from COA (cost of attendance) to determine amount of financial aid needed, need-based financial aid is determined based on the remaining amount
  • Work Study - Government funds allowing for part time employment of eligible students
  • Personal Savings
    • 529 Plan: a tax advantaged plan that is used specifically to save for college expenses
    • Classic Savings Account: a traditional option that will earn a small amount of interest over time
  • Student Loans - These are private or federal and require repayment with varying interest rates


A 529 Plan is one element that can help to greatly reduce the future burden of student loan debt. Starting a 529 Plan early and saving as often as possible can reduce future out-of-pocket costs.

Why is it called a “529” Plan?

529 college savings plans are named for Section 529 of the federal tax code.  Congress created them as a way for families to save for their children’s post-secondary education. These plans let your earnings grow without federal tax and the money you withdraw is also federal tax-free, as long as it’s used to pay for qualified education expenses.

If you’re a New Mexico taxpayer, your contributions to the plan can be deducted from your state income taxes for post-secondary education.

Who can invest in a 529 Plan?

The Education Plan is offered to any US resident no matter where they live in the US. Any U.S. citizen or resident with a valid Social Security number or a Taxpayer Identification Number (TIN) can open a 529 savings account. Most 529 account savers will be parents, but family and friends can open an account for a child or contribute to an account opened by someone else. You can even open one for yourself or your spouse!

Whether you’re new to investing or you’re an experienced investor, The Education Plan offers a variety of investment choices to meet your needs and risk tolerance.

Is a 529 Plan any better than a savings account?

529 plans are different than regular savings accounts and offer several potential advantages. First, while savings accounts are low risk, they currently credit a low rate of interest. 529 plans invest in mutual funds which have potentially higher risk but also the potential for higher investment returns. 529 plans also have tax advantages that regular savings accounts don't provide. Mutual fund investments are not guaranteed and can lose money.

What expenses do 529 Plans cover?

529 Plans are flexible. Your account can be used to pay for qualified education expenses including tuition, room and board, books, supplies, computers and fees.  

Ready to start? Enroll today.

Open an Account