"I can't get my money out of a 529 plan if I need it."
If you run into an emergency and need the money for something other than paying for school, you can access it at any time. But that decision will take a bite out of the amount you've saved since you'll pay ordinary income tax on the gains as well as a 10 percent penalty.
"If I don't use it, I'll lose it."
The truth is 529 plans actually offer a great deal of flexibility. If your kid doesn't go to college or gets a scholarship, you can switch the account to another beneficiary.
"Anybody in the family can use it, including the parents," said Finney. "You could even defer it to your grandchildren if you wanted, too."
"If I use my state's 529 plan, my child can only go to a state school."
You can generally invest in any state's 529 plan and use the money for almost any private or public college, university, graduate school, vocational school or trade school anywhere in the country — not just the state you live in. Even some international schools qualify.