529 Plan

A tax-advantaged savings account used to pay for education expenses.

A 529 plan lets families invest money that grows tax-free and can be withdrawn tax-free when used for qualified education costs like tuition, books, and room and board. Named for the tax code section that created them, most plans are sponsored by individual states, though funds can typically be used at schools nationwide.

They opened a 529 plan for their daughter the year she was born, so it would have years to grow before college.