Learn how a 529 Plan can work for you
A 529 plan is a simple and smart way to save for college. It offers you control as the account owner and flexibility in your investment choices.
The flexibility of a 529 Plan
529 plans are designed so that any U.S. citizen or resident can open an account and invest for higher education expenses. Operated by a state or educational institution, 529 plans are available in nearly every state. Begin investing when a child is young and savings has the potential to grow over time, tax deferred, until you're ready to make tax free withdrawals for college expenses.
Here’s what you need to know:
|Maximum yearly contribution per beneficiary||Varies by state|
|Federal income tax considerations||Account earnings grow federal income tax deferred until withdrawn. Withdrawals are federal income tax free if used for qualified higher education expenses.|
|State tax deduction||Varies by state|
|Ability to change beneficiaries||Yes|
|Ability to change owners||Yes|
|Investment options||Age-based, static and single mutual fund portfolios available with many 529 plans|
|Qualified use of proceeds||Tuition at any post-secondary school accredited in the U.S., books, room and board.|
|Penalties for non-qualified withdrawals||10% federal penalty on earnings|
|Ownership of assets for financial aid purposes||Account owner2|