What year did 529 accounts start?
Emma Jordan
Published Mar 26, 2026
Education savings plans were first created in 1986, when the Michigan Education Trust (MET) established a prepaid tuition plan. More than a decade later, Section 529 was added to the Internal Revenue Code, authorizing tax-free status for qualified tuition programs (also known as 529 plans).
Are 529 plans tax deductible for grandparents?
Yes, grandparents can claim the deduction for contributing to a 529 if they live in one of the 34 states that offer a state income tax deduction for 529 college-savings plan contributions. The only question is whether you must own the account or whether you can contribute to one set up by, say, the child’s parents.
Who has the best performing 529 plan?
Top 10 performing 529 college savings plans
| Rank | State | Plan |
|---|---|---|
| 1 | Nevada | USAA 529 College Savings Plan |
| 2 | Maryland | Maryland 529 — Maryland Senator Edward J. Kasemeyer College Investment Plan |
| 3 | Alaska | Alaska 529 |
| 3 | Alaska | T. Rowe Price College Savings Plan |
Can a 529 plan be owned by a grandparent?
Answer: Grandparent-owned 529 plans are treated differently than parent-owned 529 plans when completing the FAFSA (Free Application for Student Aid). Distributions made from a grandparent-owned 529 plan are considered income to the student.
How to change the owner of a 529 plan?
1 Change account owner. The grandparent can change the account owner to the parent, if permitted by the 529 plan. 2 Rollover 529 plan funds. The grandparent can roll over a year’s worth of funds to a parent-owned 529 plan. 3 Take a distribution later. 4 Wait until after graduation. …
How does 529 plan affect financial aid eligibility?
Distributions from this 529 plan also will not affect aid eligibility because the 529 plan is owned by the parent. The parent-owned 529 plan should be in the same state as the grandparent-owned 529 plan to bypass recapture rules. Take a distribution later.
Can a 529 plan be reported as a parent asset?
If a 529 college savings plan is owned by a dependent student or by a dependent student’s custodial parent, it is reported as a parent asset on the FAFSA. Distributions are ignored.
