529 college savings plan
Section 529 College Savings Plans are higher education savings plan trusts established under Section 529(b) of the Internal Revenue Code as "qualified tuition programs." Through these plans, individuals may make investments for the purpose of accumulating savings for qualifying higher education costs of beneficiaries. The plans include interests in pooled investment funds under trusts established by states or local governmental entities, as well as higher education savings plan trusts established by states.529 Plan Facts
- Convenience and Flexibility A 529 College Savings Plan account can be opened and funded at any time. The account can be started with an initial lump-sum contribution, (modest or significant) and contributors can make regular or occasional contributions as they please. Anyone (parents, grandparents, friends, even the intended beneficiary) can establish a §529 account and anyone can contribute to the account once it is opened.
- Tax-deferred Treatment of Earnings and Tax-free Distributions
- Investment choices Choose from a selection of professionally managed portfolios offered by a variety of prominent mutual fund companies.
- Control of Assets The account owner retains control of the assets and determines how the investment is used. The beneficiary can be changed or assets can be withdrawn.
- No income limits or restrictions Anyone, at any income level can establish or contribute to a 529 account.
- Low minimum investments
- High contribution limits
- Special gift and estate tax treatment Account owners can give up to five years of contributions (gifts of up to $50,000, $100,000 for married couples) in a single year to each beneficiary without gift tax consequences. Also, contributions are generally excluded from your taxable estate for federal estate tax purposes, provided you are not the beneficiary on the account.
The Following States Offer 529 College Savings Plans
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming