You've decided to enroll in a 529 plan to fund your child's college education, but how do you go about doing it? Opening an account is actually quite simple as long as you understand the process. Here is an overview to help you get started.

To enroll in a 529 plan, you'll need to request an enrollment kit from the plan manager. The enrollment kit generally contains an application and a handbook that contains information on plan rules and investment options (if any). After carefully studying the materials in the enrollment kit, fill out and sign the application. You may be asked to give the following information on your 529 plan application:

• Name, address, and phone number of the account owner
• Name and address of the beneficiary
• Social Security number (or tax ID number) of the account owner and the beneficiary
• Birth date, school grade, and state of residence of beneficiary
• Relationship between the account owner and beneficiary
• Your funding schedule for the account
• Automatic payment information
• The investment option you wish to choose
• The successor owner you wish to designate (in the event of your death)

To make the application process easier, nearly every plan now has a downloadable version of its application available on the Internet. A growing number of states also allow you to complete your enrollment on-line.

When you open an account, you'll need to designate someone as beneficiary. The beneficiary is the person who will receive the plan proceeds. You can generally name anyone you choose as the beneficiary--your child, grandchild, niece, nephew, or other relative or friend. (Your choice of a beneficiary may have gift tax and generation-skipping transfer tax consequences.) Some plans even allow you to name yourself. But rules vary from state to state, so read the guidelines set out in the plan handbook before you name a beneficiary.

Most 529 college savings plans allow you to choose among several diversified investment options chosen by the plan's professional fund manager. These options fall into two categories: age-based portfolios and static portfolios. If you choose an age-based portfolio, contributions will be placed in a portfolio of investments based on your child's age (or in some plans, the date you intend to use the funds). When your child is young, the portfolio may allocate its investments primarily to equity funds that may entail higher risk but offer higher returns than fixed income funds and money market funds. As your child approaches college age, the allocation may gradually shift to fixed income funds and money market funds.

If you choose a static portfolio, contributions will be placed in a portfolio with a fixed allocation of investments from the various investment categories. You may be able to choose an equity fund, where 70 to 100 percent of the holdings are in stocks; a fixed income fund, containing 70 to 100 percent bond and money market instruments; or a balanced fund that includes a mixture of equity and fixed income assets. You'll need to choose a fund based on factors like your child's age, your tolerance for risk, and your overall financial plan.

Although most college savings plans allow you to choose investment portfolios when you make a contribution, your opportunity to change the investment options is limited. Most plans allow you to change the investment portfolios once in each calendar year. A change of investment portfolios when you change the designated beneficiary is also permitted by most plans. (For 2009 only, states may permit 529 college savings plan investors to change the investment options for their existing contributions twice per year instead of once per year.)

529 prepaid tuition plans work differently. With prepaid tuition plans, you can't choose among different portfolios. Instead, you buy tuition credits that are guaranteed to increase in value and meet their equivalent cost of tuition when your child starts college.

When you submit your application, you'll need to make an initial contribution. The amount required to open an account varies from state to state, so you'll need to follow plan guidelines. Many college savings plans allow you to make a small initial contribution (e.g., $25 or $50) if you agree to set up automatic contributions through payroll deductions or automatic bank transfers. (A growing number of companies let their employees contribute to college savings plans via payroll deduction.) Thereafter, minimum contributions of at least $15 to $25 are generally required, although a few states have much higher minimums. The amount of the minimum contribution may also be different for residents and nonresidents of the state that sponsors the plan.

With a prepaid tuition plan, you purchase a contract that covers the cost of tuition and fees for a certain number of years. Most prepaid tuition plans require that accounts be fully funded in five years. The cost of a contract varies from state to state and may depend on the beneficiary's age at the time the contract is purchased. You can generally pay for the contract in either a lump sum or through installment payments.

Once you've opened your 529 account, make sure you periodically check how the plan is performing. Even though a professional fund manager will handle day-to-day investment decisions, you should monitor the progress of your account's growth (although you will have limited opportunities to change your investment portfolios). Also, if you're currently making installment payments, you might consider making a lump-sum contribution in the future. In that case, you'll need to become aware of federal gift tax rules. And as you approach the day when you'll begin withdrawing money from the account, you'll want to find out how the timing of withdrawals can affect financial aid to your child.

Note: Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about 529 plans is available in the issuer's official statement, which should be read carefully before investing. Also, before investing, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits.