529 College Savings Plan

by Cara Scatizzi

529 College Savings Plan Splash image

With tuition costs rising every year, saving for college is a top priority for most families with children. A 529 savings plan, also called a qualified tuition program, allows you to build up savings to pay for qualified higher education at eligible institutions using tax-free dollars. 529 plans were named after a section of the tax code and are offered through states.

How It Works

The 529 savings plans let parents save for qualified college costs free of federal and sometimes state taxes. Qualified costs include room and board, tuition and books. Prepayment may be in the form of a contribution to an account established specifically for paying higher educational expenses.

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Cara Scatizzi is a former associate financial analyst at AAII.


Discussion

John Callahan from California posted about 1 year ago:

Most 529 plans can be used for anyone in same immediate family as long as it is educational improvement. Even though a grandchild's name is noted as beneficiary it can be changed easily for another grandchild in same family or can be used by either of parents too.


James Maxwell from Massachusetts posted 9 months ago:

Can I set up a 529 account for a nephew?


Charles Rotblut from Illinois posted 9 months ago:

James,

This article on AAII may help you:

Grandparents’ Gifting for College Education

-Charles


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