An Introduction to 529 Plans

What is a 529 plan?

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

There are two types of 529 plans: pre-paid tuition plans and college savings plans. All fifty states and the District of Columbia sponsor at least one type of 529 plan. In addition, a group of private colleges and universities sponsor a pre-paid tuition plan.

 

What are the differences between pre-paid tuition plans and college savings plans?

How does investing in a 529 plan affect federal and state income taxes?

What fees and expenses will I pay if I invest in a 529 plan?

Is there any way to purchase a 529 plan but avoid some of the extra fees?

What restrictions apply to an investment in a 529 plan?

Does investing in a 529 plan impact financial aid eligibility?

Is investing in a 529 plan right for me?