A 529 plan is an investment account that offers tax benefits when used to pay for qualified education expenses for a designated beneficiary. You can use a 529 plan to pay for college, K-12 tuition, apprenticeship programs and student loan repayments.

What does a 529 plan do?

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.

What does a 529 qualified tuition plan do?

Answer: Qualified Tuition Programs (QTPs), also referred to as Section 529 educational savings plans, allow individuals to contribute to an account established to pay a designated beneficiary’s education expenses beyond high school at an eligible educational institution.

Where can I find more information about 529 plans?

You can learn more about 529 plans and other education saving options on FINRA’s Saving for College website (link is external). The website contains links to other sites, including the College Savings Plan Network (link is external) and the Internal Revenue Service’s Publication 970 (Tax Benefits for Higher Education).

Is it good to have 529 savings account?

Opening a 529 plan allows parents to achieve tax-free college savings for their children. But without a full understanding of the 529 plan qualified expenses and potential penalties associated with the accounts, the benefits of 529s can quickly be overtaken.

Where can I withdraw money from my 529 plan?

Withdrawals from education savings plan accounts can generally be used at any college or university, including sometimes at non-U.S. colleges and universities. Education savings plans can also be used to pay up to $10,000 per year per beneficiary for tuition at any public, private or religious elementary or secondary school.