A 529 plan is a tax-advantaged college savings plan sponsored by a state, state agency or educational institution and authorized by Section 529 of the Internal Revenue Code. There are two types of 529 plans. A 529 college savings plan lets the account holder deposit money into an account for a student to pay for eligible college expenses. Account holders may choose among investment options for their contributions. A 529 prepaid tuition plan allows savers to buy units or credits at participating colleges for future tuition and other expenses, thereby locking in those costs.