Are there rules on who can open a 529 account?

In theory, anyone can open a 529 account as there are no restrictions based on income. But other rules may vary from state to state. Here are a few you may encounter.

First, some plans may require that the account owner be over a certain age, such as 18. Other plans have no restrictions at all on the age of the account owner.

Second, although generally 529 plans have no residency requirements, a few may require that an account owner live in the state for a certain period of time (e.g., at the time of application, or one year or more before application) before opening a 529 account. Some plans may require that either the account owner or the beneficiary be a resident of the state; others require that both be residents.

Third, some plans may require that an account owner be a U.S. citizen or a resident alien with a valid Social Security number or taxpayer identification number.

Fourth, some plans permit corporations, trusts, and other legal entities to open accounts, while other plans do not.

Finally, some plans allow the account owner and the beneficiary to be the same person, while other plans do not.

Check the rules of any 529 plan you're considering before you decide to open an account.

Note: Before investing in a 529 plan, please consider the investment objectives, risks, charges, and expenses carefully. The official disclosure statements and applicable prospectuses, which contain this and other information about the investment options, underlying investments, and investment company, can be obtained by contacting your financial professional. You should read these materials carefully before investing. As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also the risk that the investments may lose money or not perform well enough to cover college costs as anticipated. Investment earnings accumulate on a tax-deferred basis, and withdrawals are tax-free as long as they are used for qualified education expenses. For withdrawals not used for qualified education expenses, earnings may be subject to taxation as ordinary income and possibly a 10% federal income tax penalty. The tax implications of a 529 plan should be discussed with your legal and/or tax professionals because they can vary significantly from state to state. Also be aware that most states offer their own 529 plans, which may provide advantages and benefits exclusively for their residents and taxpayers. These other state benefits may include financial aid, scholarship funds, and protection from creditors.