A. 529 plans are college saving plans that help families save and pay for college. 529 plans are run by the states, so it's important to research the rules that apply to 529 plans in the appropriate state. However, 529 plans all have some basic features in common.

There are two types of 529 plans:

• A prepaid 529 plan allows families to prepay for college, locking in today's tuition rates.
• A 529 college savings plan is a 529 plan in which an investment account set up specifically for college savings receives certain tax advantages. These advantages always include an exemption from federal income taxes on account earnings, and sometimes include state exemptions, deductions for contributions, and other benefits.

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