College Savings

529 COLLEGE SAVINGS ACCOUNTS ...

... are popular state-sponsored plans, generally with an outside investment firm making the investment decisions. The major advantages are earnings that grow free from income tax and withdrawals that are free of federal tax as long as the money is spent on qualified education expenses. Some plans offer the added advantage of a state income tax deduction for the deposits or contributions. By investing in a 529 plan outside of the state in which you pay taxes, you may lose tax benefits offered by the state’s plan. Withdrawals used for qualified expenses are federally tax-free. Tax treatment at the state level may vary. 529 college savings accounts have no income restrictions; the investors, not the student, maintain control of the account, and you can change beneficiaries to meet your family’s particular needs.