529 plans can be a cost-efficient way to pay for education expenses. These plans can be an attractive way to save since they offer multiple tax benefits and funds placed in the account can be invested. While some people find 529 plans and the range of incentives they offer attractive, others may be apprehensive because of the limitations. One of the main causes of concern can be what happens to unused funds. That said, there are a range of options account owners have for money that isn’t spent, which we’ll explore below. How Do 529 Plans Work 529 plans can be used to pay for education-related expenses from kindergarten through college. While anyone is free to create an account, they’re often used by parents and grandparents planning for a child’s education. People can also open 529 plans to pay for their own college expenses. The main benefits of a 529 plan include tax-free withdrawals for qualified education expenses, state tax deductions in select states, and tax-deferred growth for money that is invested. Funds in 529 plans are typically earmarked for education expenses which may include: