The Complete Guide To The DC 529 Plan For 2024


Are you trying to decide how to save for your child’s college? A 529 plan is a tax-advantaged investment plan that is designed to help families save for a child’s future education expenses. We are going to cover the DC 529 plan in depth so that you can decide if it’s the right college savings plan for you and your family.

Does Washington, DC have a 529 plan?

Yes. Washington DC has a 529 Plan called “DC College Savings Plan.” Below, we will answer many FAQs of the DC 529 plan.

How much is the minimum investment to open an account? 

The minimum investment amount is $25 to open a DC college savings plan. You can begin to make additional investments of $25 or more after you open the account.

What is the maximum contribution amount?

The DC 529 plan can be contributed to until the market value reaches $500,000. At that point, the accounts can grow higher through investment earnings only. More than one person can add to a DC 529 plan, there is no maximum amount per year that can be added. Of course, you will want to look at federal gift tax laws before throwing large sums into a 529 plan.

What are the three investment options? 

There are three types of investment options you can choose within a DC college savings plan. These are: Year of College Enrollment Portfolios, Individual Portfolios, and Principal Protected Portfolios.

Year of College Enrollment Portfolios are similar to a target date fund that you might see in a retirement plan. You simply choose the year closest to when your child will go to college, and the plan then invests the money more aggressively while the child is younger and makes it more conservative as the child gets closer to college age.

Individual Portfolios allow you to choose your own investment mix from eight investment options available. This gives you the option to be more actively in control of where the 529 plan is invested.

The Principal Protected portfolio focuses on protecting the principle of the money that you add into the 529 plan. This option provides interest daily and the minimum annual rate of interest is 1%.

How much does the DC 529 plan cost?

The DC College Savings Plan costs depend on the investment selection you make. The fees range from 0.15% to 0.74%.

Who can open a DC 529 plan? 

Any U.S. citizen with a Social Security number and US street address can open a DC college savings plan. It does not matter which state you live in, and it does not matter which state the beneficiary attends college.

DC 529 College Savings Plan

Who manages the DC 529 plan? 

The owner of the DC college savings plan manages the plan. The owner is the person who opens the plan. The beneficiary does not have access to managing the plan, and the owner can determine who the beneficiary will be. The beneficiary can also change to another family member if the owner decides to change it.

What are the pros of the DC 529 plan? 

A DC college savings plan has many benefits.

It allows families to plan ahead and save money over time and invest it to take advantage of market growth. Savings smaller amounts over time is often more manageable than coming up with large sums of money the year the child attends college.

529 plans also offer federal tax benefits. The growth of a 529 plan comes out completely tax free if used for qualifying education expenses.

In addition, DC residents can take advantage of the DC state tax deduction as they add funds to the 529 plan.

What are the cons of the DC 529 plan? 

The main cons to any 529 plan is that if the funds are used for anything other than qualifying educational expenses, the growth on the account is taxed and comes with a 10% penalty.  However, starting in 2024, 529s will be able to be rolled into a beneficiary’s Roth IRA without taxes or penalties as long as the account has been opened for 15 years or more.

Another con would be if you are not a DC resident, you do not get a state tax deduction by contributing to the DC college savings plan. Overall, it is a great plan with great investment options and low fees.

How do I enroll in the DC 529 plan?  

To enroll in a DC college savings plan, simply visit the DC College Savings Website and open an account.

Is a 529 plan tax deductible in DC?

The DC college savings plan does come with a state tax deduction for DC residents. Each resident can deduct up to $4000 per year on their DC state taxes by contributing to a DC college savings plan.

 A couple can deduct up to $8000 on a joint state tax return, but each individual must open their own DC college savings plan to get the full $8000 deduction. The beneficiary of each account can be the same child.

Do I need a DC 529 plan for each child?

There can be only one beneficiary listed on each DC college savings plan. If you would like to have all of your children be beneficiaries of their own college savings, it would be better to open separate accounts for each child.

That being said, beneficiaries can change. So if you have one account that is funded and let’s say your older child chooses not to go to college or gets a scholarship, you could change the beneficiary to your other child without paying any tax penalties.

Can a Washington DC 529 plan be used to pay off student loans, apprenticeships, and K-12 private schools? 

A 529 plan can be used to pay back student loans up to a lifetime maximum of $10,000.

529 plans can be used for apprenticeships as long as the apprenticeship is registered and certified with the US Secretary of Labor.

529 plans can also be used for K-12 education expenses up to $10,000 per year.

Can I open a DC 529 plan with my child’s UGMA/UTMA? 

Yes, the DC College Savings Plan allows the custodian of an UGMA or UTMA account to move funds that were previously held in these accounts into a DC College Savings Plan.

Does my child have to go to college in DC? 

No. As with any other 529 plan, you can use the assets in your account towards the cost of any accredited public or private two- or four-year college, university, or technical school nationwide. These funds can also be used at a US college or university with an international campus.

Will the DC 529 plan affect my child’s financial aid? 

529 plan assets are counted at different rates for the Expected Family Contribution (EFC) in the FAFSA formula. As of July 1, 2009, federal guidelines are as follows:

  • If the student is a dependent, a 529 plan account is considered as the parent’s asset (if the account owner is the parent or the dependent student). As a result, it will generally be counted at a rate of only 3-6% of its value for the EFC.
  • If the student is not a dependent and is the account owner, the 529 plan account is treated as the student’s asset and is generally factored into the EFC at a higher rate of 20%.
  • In other cases, the account does not count as an asset for federal financial aid purposes. (However, a student may have to report distributions received from the account as income for these purposes.)

Note: Financial aid programs offered by educational institutions and other non-federal sources may have their own guidelines for the treatment of 529 plan accounts. For complete information about financial aid eligibility, you should consult with a financial aid professional and/or the state or educational institution offering a particular financial aid program, since rules and regulations often change.

How has the DC 529 plan performed in the past few years? 

This depends on the investment choices the owner has chosen. Since the DC 529 plan is invested in various stock and bond indexes, the performance will align very closely with the US and international indexes it follows.

For example, the US Total Stock Market Portfolio offered within the DC College Savings Plan has returned over $20% from 2019-2021. These returns are in line with the US Total Stock Portfolios in various brokerage firms for these same years.

How do I withdraw money from the DC 529 college savings plan? 

To withdraw money from a DC 529 plan, simply contact the DC College Savings Plan or log into your online account and request a withdrawal of money.

What happens to a DC 529 Plan if not used?

Funds can remain in a DC College 529 plan indefinitely. There is no time or age limit to how long money may remain in a 529 plan. If it is not used for qualifying education expenses, and you then decide to take it out later for non-qualified expenses, you will pay taxes on the growth and a 10% penalty.

Tax benefits and investment fees: How DC 529 plan compares to other 529 plans

  • Tax benefits: For DC residents, the DC 529 Plan has excellent state tax benefits. Compared to other state 529 plans, the DC plan is among one of the top when it comes to state tax savings.
  • Investment fees: The DC 529 Plan does not have the highest nor the lowest fees for 529 plans. For DC residents, the state tax deduction is worth the potentially higher investment fees. For non- DC Residents, there are other 529 plans with better investment options and lower fees to consider, especially if the state you live in does not offer a state tax deduction for 529 contributions.

How should you select a 529 plan?    

 Start with determining whether your state offers a state tax deduction for 529 contributions. If your state does offer tax deductions, your state might be the best option for a 529 plan. If your state does not offer a debt tax deduction, the next step should be looking at rankings of various state 529 plans to find the best fit for your family. Two top items to watch for when selecting a plan are investment choices and account and investment fees.

Can you have multiple 529 plans? 

Yes, you can have multiple 529 plans and a child can be a beneficiary of multiple 529 plans. There’s no legal reason that you cannot open another 529 plan if you’ve already opened one previously.

Can you rollover your 529 plan from one state to another state?

Yes, you can roll 529 plans from one state plan to another state plan. It is important to check with your state plan to determine the rules for that specific state. There are no federal income tax consequences to do a rollover of a 529 plan, but some states treat outbound rollovers as non-qualified distributions.

There may also be recapture of some state income tax deductions that you took while contributing to a 529 plan. If you move to a new state that offers a tax deduction, you can simply stop contributing to your old state plan and start a new state plan if there are issues with rolling your prior 529 over.

Is the DC 529 plan good? 

The DC 529 plan can be a great choice for DC residents, and possibly others. Overall, it has good ratings and average investment costs. There are many benefits to using a DC 529 plan, we recommend you speak with your financial advisor to determine which 529 plan is the best for your family.

Start saving towards a DC 529 college savings plan!

Now that we have covered all of the questions related to the DC 529 plan you can decide if it’s the right college savings plan for you and your children. If you’re interested in a comprehensive financial plan, including 529 plan recommendations, schedule a free discovery call today.


Kayla Andrews Financial Planner

Kayla Welte, AFC®, ChFC®, CFP®, has been helping clients maximize their finances since 2009. With a background in financial education & counseling, Kayla is passionate about helping people prioritize & reach their financial goals. Kayla is a Financial Planner at District Capital Management, a financial planning firm designed to help professionals in their 30s & 40s elevate their finances. Schedule a free discovery call.


District Capital is an independent, fee-only financial planning firm. We help professionals and entrepreneurs in their 30s and 40s elevate their finances and maximize their money. We are based in Washington, D.C and we work with people virtually nationwide.

Search Topics

Financial Advisor Near Me

Recent Posts

Money 101

Ready To Maximize Your Finances?

Schedule A Free Discovery Call

Ready to take charge of your financial future?

Other Great Posts You Might Like

Self-employed? A Solo 401(k) Might Be A Good Option For You

Solo 401k



Want to know the right questions to ask a financial planner to make sure they have your best interests at heart? We’ve got you!

questions to ask a financial advisor