section 529

Higher Learning: A Potentially Expensive Lesson About 529 Plans

By Karl de Costa

A “529 qualified tuition plan” is an education savings plan designed to encourage and help families set aside funds for future college costs.  It’s named after Section 529 of the Internal Revenue Code, which created this type of plan in 1996.

Americans have an estimated $248 billion currently invested in 529 plans.  And it’s easy to understand why.  Generally speaking, 529 plans offer an impressive array of income tax and estate tax breaks, plus other benefits.

  • Earnings on funds within the plan grow federal and California tax-free as long as the money is taken out to pay for qualified education-related expenses of the designated beneficiary, such as tuition, fees, books, computers, and room and board. (more…)