Believe it or not, we might not have the 529 plan today if it weren't for the state of Michigan suing the Internal Revenue Service (IRS).

A brief history of the 529 plan:

1986: The first prepaid tuition plan was created in the state of Michigan.

1994: The state of Michigan wins its lawsuit vs. the IRS to get a refund on federal income tax on the plan’s investment earnings.

1996: Section 529 was added to the Internal Revenue Code (where the "529 plan" gets its name), which provided tax exemption to qualified state programs and deferred tax on the participants’ undistributed earnings.

2001: Earnings of a Section 529 plan are exempted from federal income tax as opposed to deferring the tax on the undistributed earnings.

2015: Computer technology (equipment, internet, etc.) is added to the list of college expenses (tuition, books, etc.) that can be paid for by a 529 plan.

2017: Up to $10,000 in yearly tuition for K-12 schools becomes an eligible expense.

2024: SECURE Act 2.0 goes into effect, allowing $35,000 to be rolled over from a 529 plan to a Roth IRA.

Clearly, the 529 plan has come a long way, and it continues to become more powerful and flexible over time!