How to Open a 529 Account Before Your Child Is Born

Quick Answer

It’s possible to open a 529 plan for an unborn child. Because they don't yet have a Social Security number, however, the account cannot be in the child's name. Another person, such as a parent or grandparent, would need to open the plan and name the unborn child as beneficiary. Once the child is born and is assigned a Social Security number, you can transfer the plan to them.

Cropped shot of a pregnant woman sitting on the couch using her laptop at home

While you can't set up a 529 plan in the name of an unborn child, you can name yourself the beneficiary until the child is born and has their own Social Security number. A 529 savings account can be a great way to fund future education needs even before college since it can also be used for K through 12 education. If you or a loved one are considering opening a 529 account for a new addition to the family, read on to learn more.

Are You Able to Open a 529 Plan for an Unborn Child?

A 529 plan is an investment account designed to help families save for college and other education-related expenses. You can use it for tuition, fees, room and board, books and other eligible costs.

The main requirement for setting up a 529 plan is that the beneficiary has a Social Security number. And because Social Security numbers aren't assigned until a child is born, unborn children can't have their own 529 plan account. However, a loved one can still set up the account in their name and list the unborn child as the beneficiary until the child receives a Social Security number.

Some states might also have age limits on who can be named as beneficiaries, so check the requirements for the state in which you plan to open the account.

There are two types of 529 plans: prepaid tuition plans and savings plans. Both offer tax advantages and flexibility, but there are some key differences to consider when making your decision.

Education Savings Plan vs. Prepaid Tuition Plan
Education Savings Plan Prepaid Tuition Plan
Allows you to save for educational costs through investments Allows you to purchase future semesters at specific colleges at today's prices
You can put in as much money as you like as long as it complies with gift tax rules The money you put in is based on expected education costs
Usually doesn't have a residency requirement Likely has a residency requirement
Withdrawals can be used at almost any U.S. university, K-12 schools and even apprenticeship programs Withdrawals are limited to use at participating colleges and universities
Money can be used for various qualified expenses like tuition, room and board, computers and books Money can only be used for certain expenses, such as required fees and tuition
You choose an investment portfolio, with assets such as mutual funds or exchange-traded funds, to grow your contributions over time Contributions are usually guaranteed or backed by a specific state sponsoring the plan (but check to be sure)

Prepaid tuition plans offer less flexibility than education savings plans, but both provide tax benefits and allow you to save and plan for the future.

How to Set Up a 529 Plan

Setting up a plan for your unborn child is straightforward but requires specific information. You'll also need to research to determine which plan is right for you. The basic steps are:

  1. Choose a 529 plan. They're offered by financial institutions through a state program. Many states have both direct-sold and broker-sold 529 education savings plans. If you want someone to help you with the process, you can open an account in a broker-sold 529 plan (although you may incur fees). If you're comfortable making investment decisions, you can open an account directly with the state sponsor or program manager.
  2. Fill out the application. You'll need to provide the account owner's and beneficiary's names. In the case of an unborn child, you might serve as the beneficiary until the child is born, at which point you can name the new baby as the beneficiary. You'll also need to provide information about the account owner and beneficiary, including address, telephone number, email address, date of birth and Social Security number or Individual Taxpayer Identification Number.
  3. Contribute to your plan. Like a regular bank account, you'll need to fund your account by mailing a paper check to the 529 plan or by transferring the money electronically from a bank account.
  4. Select your investments. You can allocate your money among several investment options or just one. Look for plans with the best performance and low fees. Tip: You have to pay fees every year, but tax breaks (if your state allows them) apply only to that year's contributions.

States that offer tax benefits for contributions might also limit the size of your annual contribution eligible for the tax benefit. Many plans also have a lifetime limit on contributions. Each plan is different, so do your research or talk with a trusted financial advisor specializing in 529 plans to set you up for success.

Like other investments, the biggest things to remember are your goals, timeline and risk tolerance. For example, if you were planning on using the funds for your future child's tuition at a private elementary school (as opposed to a college or university), that means you'll need to use money from the 529 plan fairly soon. In this scenario, you'll likely choose more stable and less volatile investments.

Opening a 529 plan might seem overwhelming, but making time to research your options and getting help from a trusted advisor if you need it will make the journey a lot simpler.

Alternatives to a 529 Plan for College Savings

If you're not sure whether a 529 plan is right for you, there are other ways you or loved ones can help children save money for college early:

  • Set up a regular savings account specifically for college costs.
  • Look into other investment vehicles, such as stocks, bonds and mutual funds (or even real estate), that provide better returns than traditional savings accounts but have more flexibility around using funds.
  • Learn what grants and scholarships might be available to them.
  • Look for alternative income sources such as part-time jobs or side hustles to increase income and save money.
  • Teach good money habits so your future child can make healthy financial decisions and participate in their education savings journey.

The Bottom Line

Considering the tax advantages and other benefits, opening a 529 plan for an unborn child can be a great decision. Be sure to research the requirements in the state where you plan to open an account before you make any big decisions. Whether you consult with a financial advisor or handle everything yourself, it's always a good idea to consider other ways to make and save money for future education costs.