Started in 1996, 529 plans provide tax incentives for those saving for post-secondary education. The plan allows funds saved to be used at any eligible education institution, which typically includes colleges, universities, vocational schools or any post-secondary educational institute that is currently eligible to participate in U.S. Department of Education student aid programs. Operating much like at 401(k) or IRA, funds deposited into a 529 plan are not taxed, either by the federal government or the state in which the participant resides.
529 funds can be withdrawn for post-secondary education expenses such as tuition, fees, books, and room and board. Along with tuition and related costs, computer technology costs such as the purchase of a laptop computer, or Internet access can be paid for with withdrawals from the plan.