A 529 plan is a college savings plan with built in tax advantages, most notably, that earnings in the plan will not be taxed if used for qualified educational expenses. 529's are investment vehicles, operated by states. 529's operate using after-tax contributions from the family, in a similar fashion to a Roth IRA.  Most states have at least one 529 plan. Many states also offer income tax deductions for those who contribute to the 529 in the state of residency.

The Tax Cut and Jobs ACT of 2019 increased the maximum annual amount for a 529 Plan to $15,000 and also made it possible to use 529 plans for secondary school expenses.

If you make a non-qualified withdrawal from a 529 plan, you will incur income tax and a 10% penalty on the earnings portion of the withdrawal only. The principal portion is never be taxed or penalized because it came from post-tax funds.