Are you looking for a smart way to save for your child’s college education? CDs can be great tools for saving, but if you’re looking to supplement your plan, you may want to consider starting a 529 college savings plan.

A 529 plan is an investment account that works like an IRA but, as The Wall Street Journal points out, its major benefit is that you don’t pay taxes on its earnings. Nearly every state has its own version of a 529 plan, and in most cases they can be used for schools outside of the state that put the plan forth. “You can be a California resident, invest in a Vermont plan and send your student to college in North Carolina,” points out.

The U.S. Securities and Exchange Commission notes several additional benefits of 529 College Savings Plans:

  • Lots of qualified expenses. The money in a 529 plan can be used for more than just tuition; it can go to any “qualified higher education expenses.” That means room and board, school fees, books and in some cases computers.
  • High contribution limits. Many 529 plans have contribution limits upwards of $200,000, letting you make the most of your savings.
  • No age limits. Thinking about going back to school? There’s no maximum age on the 529 plan, so you yourself can use it to take classes, or to fund your spouse’s education.
  • Open anytime. There’s no set enrollment period, so you can set up your account and start saving whenever you’d like.

If you’re looking for a 529 plan that’s right for you and your child, the independent site has enrollment information as well as a database of financial advisors who specialize in 529 plans.

Are you saving money to send a child to college? Is a 529 plan part of your saving strategy?