What is a 529 College Savings Plan?
A 529 College Savings Plan is an investment account that allows you to invest funds that can grow tax-free and be withdrawn tax-free. Many states offer additional tax deductions or credits to encourage participation. While a beneficiary is named when the plan is created, the donor maintains control of the account.
Who can contribute?
Anyone can contribute to a 529 plan: grandparents, aunts, uncles, as well as parents.
What kinds of expenses can the 529 plan pay?
Funds can be withdrawn from a 529 plan at any time, but only qualified withdrawals will be tax free. Qualified withdrawals are for expenses required for the enrollment or attendance at an eligible college or university. This would include tuition, fees, books, supplies and in some cases room and board.