Iowa Educational Savings Plans Trust

529 Defined - Your Guide to the Lingo

Let’s boost your 529 know-how! Take a look at the common investing terms to de-mystify some of the financial terms you have seen on our website and on your account statements.



529 Plan

A type of investment account you can use to save for education. 529 plans are sponsored by states, and College Savings Iowa is a 529 plan established and sponsored by the State of Iowa. The term 529 comes from Section 529 of the Internal Revenue Code, which specifies the tax advantages available to those saving in a 529 plan.

Age-Based Portfolio

A series of investments that gradually become more conservative over time as you get closer to using the funds. Age-based portfolios complement your child's age and your comfort level with risk.

Asset Allocation/
Asset Mix

The mix of investments – like stocks, bonds, and short-term reserves – you hold in your account when you invest in an Age-Based Track or an Individual Portfolio, both of which invest in securities like mutual funds. Your asset allocation should be based on your goals, time frame and comfort with risk.


A debt investment in which you “loan” money to the issuer in return for future repayment of the loan, plus interest. Bonds give you the opportunity to earn income and can help balance the risks associated with stocks.


A way to manage the risk in your account by owning different kinds of investments – from the various asset classes (stocks, bonds and short-term reserves), to asset classes with different characteristics (style, domestic versus international exposure, etc.).

Eligible Education

If a postsecondary school has been assigned a federal school code by the Department of Education, then it is an eligible institution under Section 529. This includes 2- and 4-year colleges, postsecondary trade and vocational schools and postgraduate schools. Additionally, up to $10,000 per year can be withdrawn to pay for tuition at a qualified K-12 public, private or religious school.

Exchange or
Investment Exchange

Twice a year, you can move the money in your 529 account to a different mix of investment options in the plan. Those who invest in Individual Portfolios rather than an age-based option might use these exchanges to rebalance their investments back to their desired asset mix.

Individual Portfolio

A static investment that won't automatically become more conservative over time. Each Individual Portfolio is generally made up of one or more mutual funds that invest in stocks, bonds, short-term investments or a mix of asset classes. You can build a 529 plan account to complement your investing goals, time horizon and feelings about risk by investing in one or more individual portfolios.

Mutual Fund

In this type of investment vehicle, your money is pooled with money from other investors and invested in securities like stocks, bonds and certificates of deposit (CDs). Mutual funds can provide investors with access to diversified, professionally managed portfolios, even if they don't have a large amount to invest.


A type of security that represents ownership in a corporation—giving you claims on part of the issuer's assets and earnings. Stocks provide you with the opportunity to grow your money and generally expose you to more risk than bonds.


In a 529 plan, the money your investments generate isn't taxed until you withdraw it. If you withdraw it to pay for a qualified expense, it isn't taxed.

Read the Program Description for details about College Savings Iowa.

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