Best Florida 529 College Savings Plans

Florida’s 529 plans give individuals and families a great way to build college savings.

Key Terms

  • Floridians can use contributions to 529 plans as state and federal tax deductions.
  • These user-friendly plans are managed by professional investment managers.
  • Funds in a 529 Plan can go towards all fees related to college, vocational training, and more.

Florida is famous the world over as a vacation destination, but it’s also home to millions of year-round residents who enjoy the fine weather, beautiful beaches, and popular attractions. From cosmopolitan cities like Miami to quaint and unique keys, the Sunshine State has a way of life for almost any type of person.

Given its reputation as a great way to live, it’s not surprising 209,671 babies are born in Florida each year, according to the CDC. Having kids does mean planning for the future, however, especially if those kids end up going to college. That’s why many Flordians start thinking about savings as soon as their kids are born and weighing the benefits of various financial products. 

One particularly popular way to save for college in Florida is the 529 plan. These financial products give parents and families a dynamic way to save for college costs while also enjoying some tax benefits. Since the cost of a private college in Florida now averages out at $41,843, according to the National Center for Education Statistics, it’s no wonder that many Floridians are now considering setting up 529 plans for college and other secondary education opportunities.   

How 529 plans work in Florida

A Florida 529 college savings plan is way to save for a college education using tax-free investment options. The government wants to encourage saving for college, so the IRS offers an account that allows you make contributions which are free from federal income tax, where the money can be later withdrawn for qualified higher education expenses at eligible educational institutions.

You do not need to be a state resident to open up a Florida 529 college savings plan, nor do you need to spend the money on in-state tuition. You can use the money if your child enrolls in a state college or chooses to pursue an out-of-state college.

Opening a Florida 529 savings plan involves the same steps you would go through to open another financial account: you choose a product, fill out an application, and then make an initial deposit. The initial deposits on Florida 529 plans are very manageable; in fact, Florida 529 plans can come with no required initial deposit, minimum contribution or application fees. 

You don’t even need to have a child to open a Florida 529 college savings plan. There are no eligibility requirements to open a 529 plan. The account owner can be yourself initially and you can change the beneficiary whenever you want, which gives you flexibility to use it for a future child, yourself or another family member.

You’re also not obligated to open up a 529 plan in Florida. Florida residents can open up a plan in their own state or they can open up a plan in another state, like New York, if they like other’s state college savings program better. Keep in mind that one of the main benefits of a 529 plan is that you can avoid state tax, but in a state like Florida where there is no income tax, you’re really free to open a 529 plan wherever you think is best.

Once you set up your account, you can schedule monthly deposits or have money taken from your paycheck automatically and deposited into the 529 plan. Initially, you make certain investment selections, like what type of mutual funds to use, the allocation of those funds and how to handle your investment earnings. After you’ve made the initial decisions, the investment manager does the work from there, managing the education savings plan to grow your money and help fund your child’s education costs.

Top 529 plans in Florida

What are the advantages and disadvantages of Florida 529 plans?

529 plans in Florida offer a range of advantages to parents and families wanting to invest in their children’s futures, regardless of whether they work with a financial advisor or know whether their child will attend a private school or public college in the future.

The main benefit for many is that 529 plans offer federal tax benefits. 529 plans also offer a lot of growth potential as managed plans, especially when compared to traditional savings accounts. Another advantage is that funds from 529 plans can go to a wide range of education expenses, including tuition, fees, books, supplies, computers and more. Finally, these financial products have a minimal impact on financial aid.

Are there any disadvantages? If you wish to use the funds for something other than qualifying education expenses, those distributions will be subject to taxation and you will need to pay a 10 percent fee on the money to the plan institution.

There are also certain Florida specific state plans like the Florida Prepaid College Plan which is managed by the Florida Prepaid College Board. While those plans can be advantageous if you are a Florida resident and are confident your child will attend college in Florida, they can prove problematic if your child decides to attend a different school. Most of these types of plans are prepaid tuition plans that allow you to prepay your child’s future college tuition with the goal of taking advantage of tax breaks and eliminating tuition inflation.

If you’re looking to explore 529 plans in other states, check out our national overview of 529 plans as a starting point in your search.

Joshua Holt is a father of one and the founder of Biglaw Investor. He opened a 529 plan years before his son was born to take advantage of the tax breaks, knowing that even if he didn’t have children he’d still find a good use for the money. Prior to writing about 529 plans, Josh practiced private equity mergers & acquisition law for one of the largest law firms in the country.

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