Opening a 529 can be completed in (as little as) these four steps:

How to Open a 529 Plan

1. Choose a 529 Plan. Parents and grandparents can invest in any state’s 529 plan, not just their own state’s 529 plan, so they should shop around.
2. Determine the Type of 529 Plan Account.
3. Complete the 529 Plan Application.
4. Fund the 529 Plan.
5. Choose Investments for the 529 Plan.

GET was created by the state Legislature in 1997, and allows parents to prepay tuition costs with a tax-free fund. This 529 college-savings plan is called DreamAhead, and it’s like a 401(k) or Roth IRA, with fund choices in stocks and bonds.

If all you can afford when you open your 529 plan is an initial contribution of $50 or $100, that’s fine; you can plan to build your account over time, contributing as much as you can afford. Many families start their 529 plan with small deposits at first, and every dollar added is less debt down the road.

Some 529 plans allow account owners to make electronic payments directly to the college. This avoids a multi-step process where the account owner must deposit the money to their bank account and then mail a check to the college or do an ACH transfer from their bank account to the college.

1. Select a plan. You’ll have to choose between a savings plan or a prepaid plan.
2. Choose a beneficiary. This will likely be your child — but remember, you can change the beneficiary at any time without penalty.
3. Open the account.
4. Build your portfolio.

Where Can My 529 Plan Be Spent? Tuition and Fees. Both tuition and fees for full and part-time students can be paid with 529 plans. Room and Board. Whether you live on campus or off, you can use your 529 plan spending for your room and board expenses. Required Textbooks and Supplies. Technology. Special Needs and Adaptive Equipment.

Money saved in a 529 plan can be used to pay tuition and fees associated with college or graduate school. Eligible schools include any postsecondary educational institution eligible to participate in the federal student aid program administered by the U.S. Department of Education.

Beginning in 2019, each year individuals may contribute up to $6,000 into a Roth IRA ($7,000 for those aged 50 and above). Individuals can contribute a maximum of $15,000 into a 529 plan on an annual basis, with the option of bundling 5 years of contributions ($75,000) into a single year.

Cashing out a 529 plan to pay for non-educational expenses provides the most benefit to an account holder in a higher income tax bracket. The penalty is less significant when the account holder pays a higher rate on interest income.