<img height="1" width="1" style="display:none" src="https://q.quora.com/_/ad/bdd9d941ae754c498fe2d2326d029ffa/pixel?tag=ViewContent&amp;noscript=1">

Can I Have 529 Plans from Multiple States?

Featured Stories

Filter By Categories

If you are evaluating 529 college savings plans to save money for a child’s higher education, then you may be wondering if you can establish a 529 plan in more than one state. Good news: the answer is yes.

Most 529 college savings plans do not carry an in-state residency requirement. You are not restricted to opening just one 529 plan per beneficiary or, if you want to establish multiple 529 plans, opening them in just one state. Beneficiaries are not prevented from receiving any number of 529 plan accounts.

That being said, there are benefits to opening a beneficiary’s first 529 plan account in your home state. Thirty states permit 529 plan contributors to claim a deduction on their state taxes to offset the expense of 529 plan account contributions - provided that those contributions were made to 529 plans established in-state. If you expect that your annual 529 plan contributions will exceed the limit associated with the maximum possible state tax deduction, then you may want to consider investing the non-deductible portion into a 529 plan housed in another state.

Another possible, albeit less likely, reason to establish 529 plan accounts in more than one state is to circumvent the maximum contribution limits imposed on 529 plans by each individual state. If you have significant cash to invest annually in 529 plans, then you may need to hold 529 plan accounts in multiple states to not exceed any state’s maximum contribution limit. This is perfectly legal, provided that you do not use 529 plan accounts as tax-sheltering structures for large amounts of income. You need to be able to reasonably demonstrate, if questioned by the state in which your 529 plan account is located, that the money contributed to the account will likely be necessary to fund the beneficiary’s higher education and related expenses. (Given the high cost of college and graduate school, plus the associated costs of living, this would not be exceedingly difficult to do.)  Having extremely well-funded 529 plan accounts in too many states would raise suspicions, and jeopardize those states’ tax statuses under Section 529 of the Internal Revenue Code.

The conventional wisdom is to only establish 529 plans in multiple states if you have a specific reason for doing so. Otherwise, you will be tasked with completing additional paperwork, including annual tax forms, and will need to continually monitor and adjust asset allocations for every account that you manage in every state. Those extra requirements can bring about unforeseen complications that certainly you would much prefer to avoid.

Learn more about how to choose a 529 plan, from the experts at Edmit.

Edmit's advice helps you to be better off after graduation.

  • Merit and financial aid estimates based on your student profile
  • Earnings estimates and financial scores for your college and major
  • Recommendations to save thousands on college

Sign up for updates

Popular Tags

Financial Aid and Scholarships* Cost of College* paying for college financial aid FAFSA Student Loans* grants and scholarships federal student loans Saving for College* Salary and Career* college tuition 529 plan cost of attendance expected family contribution private student loans college financial planning financial aid award taxes career college savings plan room and board on-campus housing merit scholarships budgeting for college college expenses federal financial aid merit-based financial aid private universities public universities edmit hidden gems edmit team college costs parent PLUS loan college applications living expenses CSS profile education expenses financial need income application fees career fit choosing a major financial aid appeal off-campus housing choosing a college college majors loan forgiveness affordable college degree programs loan repayment repayment plans researching careers student loan assistance student loan debt work-study application fee waivers career exploration college search coronavirus edmit scholarship institutional aid net price private scholarships SAT career goals college visits in-state tuition prepaid tuition plans ACT budget free tuition international students internships need-based financial aid need-blind colleges qualified higher education expenses retirement savings school-based scholarships southern colleges standardized testing tuition discount tuition guarantee tuition payment plans 401k UGMA UTMA applying to college college financial health college ranking systems college spending college transfers credit score discretionary income distance learning education savings accounts fees financial literacy full ride scholarship gap year grants health insurance options investment ivy league schools liberal arts degree meal plans midwestern colleges need-aware colleges out-of-state tuition saving state aid tuition increases western colleges 568 presidents group Inversant MEFA asset protection allowance best price campus life college advisor college credits college deposit college viability community college concurrent enrollment cost by region cost by state crowdfunding dorms early decision educational expenses esports fee waivers financial wellness for-profit universities fraternities and sororities full tuition graduate school home equity loan income share agreements job applications line of credit lists medical expenses medical school military benefits net price calculators new england colleges non-profit universities online learning online tuition out-of-state students percent need met private college consultant remote learning self-assessment siblings small business state schools student bank accounts student organizations subsidized loans title IV schools travel expenses tuition decreases tuition insurance tuition reciprocity undocumented students unsubsidized loans work-based learning