FDIC Insurance on 529 Plans

529 college savings plans allow you to save for higher education, and you may qualify for some tax benefits.

Most parents invest in mutual funds, hoping they'll be able to earn enough (combined with their contributions) to create a healthy college fund.  However, those accounts can also lose money.

For a government guarantee, you'll need FDIC insurance on your 529 savings.  This is hard to find, but Virginia's 529 program recently added an FDIC insured option for conservative savers.  You don't have to live in Virginia to use the program, but you should investigate your home state's program before using a different state's 529.

Before you get too excited, consider whether or not you need FDIC insurance on your 529 savings.  You won't lose anything on insured deposits, but you'll only earn bank-like returns.  This may or may not make sense, depending on your situation.  A financial planner and tax advisor can help you understand how a 529 will impact your finances.

Further reading:

• Overview of 529 Plans
• Saving for College from About.com
• How FDIC Insurance Works