Do you know how 529 College Savings Plans work (hint: most families don’t)—or that you can start saving for a child’s educational future with just $25?
May 29 (5/29) is more than just a date—it’s National 529 Day, created to raise awareness of one of the most powerful (but underused) tools for increasing educational opportunity and financial security.
Named after Section 529 of the IRS Code, these tax-advantaged savings accounts were designed to help families plan ahead for higher education. Higher education or specialized skills can significantly increase one’s earning potential—on average, college graduates earn hundreds of thousands more over a lifetime compared to those with only a high school diploma. Children with even a small college savings account are significantly more likely to attend college than those without one.
Just having a savings plan can signal that higher education is possible—and worth preparing for. But too often, confusing rules, limited access to financial education, and other barriers may prevent families from opening one.
We’re here to change that.
Busting the Top Myths About 529 Plans
MYTH 1: You can only use 529 plans at DC schools.
FACT: You can use your 529 plan at eligible colleges, universities, trade schools, graduate programs (including law and medical), and even apprenticeships across the U.S.—and internationally.
MYTH 2: It’s just for tuition.
FACT: 529 funds cover a wide range of qualified expenses, including:
Tuition and mandatory fees
Books and supplies
Computers and required equipment
Certain room and board costs
K-12 tuition
Special-needs education expenses
Apprenticeship-related toolkits
Student loan repayment
Disclaimer: Using the funds for anything other than education expenses will lead to a 10% penalty on the growth of the investment.
MYTH 3: It’s expensive to open or maintain.
FACT: With a DC College Savings Plan, you can start saving with just $25, and you can use tools like Ugift® and Upromise® to help you grow contributions through gifting and shopping rewards.
MYTH 4: You have to be an investing expert.
FACT: You do not need to be an investing expert! There are simple investment portfolio options that adjust automatically, or you can customize your plan. You can also decide your level of involvement.
MYTH 5: It’s too late to start.
FACT: Even if your child is in high school—or if you yourself are going back to school—it’s not too late. 529 earnings grow tax-deferred, and qualified withdrawals are tax-free.
MYTH 6: If the beneficiary doesn’t go to college, the money in a 529 plan is lost.
FACT: You have options—like changing the beneficiary to another family member or rolling up to $35,000 of the funds into a Roth IRA.
Want More Facts?
Check out this comprehensive fact sheet, “The Biggest Myths of 529 Plans,” developed by the DC College Savings Plan, for more information.
DC Tax Benefits
DC taxpayers can deduct up to $4,000/year (or $8,000 for couples filing jointly) from their DC income taxes when contributing to a DC College Savings Plan. The contributions are not tax-deductible at the federal level, but the money invested in the plans grows tax-free.
Who Can Open a 529 Plan?
Anyone! Parents, grandparents, godparents, mentors—even you, for your own education or career training. There are no income or age limits, and you stay in control of how and when the money is used.
Why It Matters
529 plans offer:
Tax-deferred growth
Flexible investment options
High contribution limits
Family-friendly features like gifting tools
Peace of mind for your educational goals
Make This 5/29 Day the Day You Take Action
Want to dive deeper this summer?
Join our DC Young Adult Financial Empowerment Program—a free, hands-on series that includes a session on college savings plans.
The next session will take place from June 10 to August 5. Registration is open now: https://www.tzedekdc.org/empowerment
Need more help figuring it out?
Submit a Tzedek DC Legal and Financial Counseling Services inquiry or call us at (202) 274-7386.