A Less Taxing Way to Save for College

529 College Savings Plan

This plan, named after Section 529 of the Internal Revenue Code, is designed to help you make saving for college a priority while offering tax benefits.

A Closer Look

  • A 529 plan offers potential tax benefits that some other savings vehicles can't provide. For example, earnings and withdrawals may be free from federal and possibly state income taxes.
  • Funds can be used for qualified higher education expenses – including supplies, computers and related equipment, and room and board.
  • There are no state residency requirements. You can reside in Illinois, invest in the Nebraska plan, and send your student to an eligible college in California.
  • There are no income restrictions and contribution limits are generally higher than other options (varies by state or institution).
  • Funds can be transferred to another family member if the first beneficiary doesn't attend college or doesn't use all the assets.

Funding Options

Your after-tax contributions will be invested as you choose from a variety of investment portfolios. Things to consider when making your selections include your timeline (or when you'll need to withdraw your money) and your comfort with risk. Learn more about our 529 College Savings Plan.

Tax Advantages

Contributions are not federally tax deductible, but amounts invested in the account grow tax free.

All earnings in the account accumulate on a tax-deferred basis and can be withdrawn from the account tax-free if used to pay for qualified higher education expenses, such as tuition and fees, required books, supplies, computers and related equipment, and qualified expenses for room and board. (Subject to certain limits, room and board expenses of a student enrolled on at least a half-time basis may also be paid.)

Risk Disclosures

Investing involves risk, including potential for loss.

Before investing in a 529 plan, consider the plans investment objectives, risks, charges, and expenses. Contact the plan issuer for an official statement containing this and other information. Read it carefully. An investor should consider, before investing, whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program.

Neither State Farm nor its agents provide tax or legal advice.


Not FDIC Insured

  • No Bank Guarantee
  • May Lose Value