529 plans are popular ways to save tax-advantaged funds for education expenses. Follow these steps to set up 529 accounts:
Create 529 Account(s)
Step 1: Go to My Plan > Accounts and Assets
Step 2: Open the Savings section
Step 3: Click on "Add an account +"
Step 4: Indicate that this is a 529
Step 5: Decide if this is your account or your spouse's account
Step 6: Either link your account or enter details manually (we will be doing Manual Entry for this exercise)
Step 7: Enter an account name and balance. Enter a balance of $0 if you have yet to fund the account
Step 8: If your 529 is invested, enter optimistic and pessimistic growth rates. If your 529 is liquid, enter "0%" for growth rates
Step 9: Press "Next: Contributions" EVEN IF you do not plan to set contributions to the account
Step 10: Decide if you would like to contribute to the account. If you select No, you have successfully set up your 529. If you select Yes, continue on to step 11
Set up annual contributions
Step 11: Enter a monthly contribution amount
Step 12: Decide when you would like to start and end contributions
Step 13: Press "Save" once complete
Step 14: Repeat this process if you have multiple accounts, such as one per child
529 accounts have annual contribution limits per contributor (contribution limits are not modeled in the tool).
529 accounts must be used for education expenses (spending restrictions are not modeled in the tool).
The majority of states do not tax contributions to 529 plans, though some do. The tool will model state deductions when they are available.