A 529 College Savings Plan is a state-sponsored, tax-advantaged savings plan that can help families and individuals save for higher education expenses. These plans offer a number of benefits, including money saved can grow tax deferred and withdrawals are federal and state income tax free when used for qualified higher education expenses.
Funds can be used at most accredited colleges and universities in the United States and at certain colleges abroad. Qualified higher education expenses include tuition, fees, certain room and board expenses, books, supplies and equipment required for attendance at an eligible higher education institution.
With most plans, your school choice is not affected by the state your 529 savings plan is from. So, for example, you can be a New Jersey resident, invest in a California plan and send your student to college in North Carolina.
In addition to the federal tax benefits, many states offer a state income tax deduction or tax credit for contributions to their 529 College Savings Plans as well as state income tax-free withdrawals for qualified higher education expenses.
Account owners maintain control over all funds in the 529 College Savings Account. 529 College Savings Plans also offer certain gift and estate tax planning benefits. Each plan listed below offers a variety of low-cost investment options and low account minimums.
You don't need to be a resident of a state to enroll in that state's 529 College Savings Plan to save for college. In fact, it is sometimes beneficial to look outside, since reduced fees sometimes offset a state tax deduction. The same is true if your state has no income tax. If your state has established a 529 plan, such state may offer favorable state tax or other benefits that are available to you only if you invest in that plan. Those benefits, if any, should be one of the many appropriately weighted factors you consider before making a decision to invest in any state’s 529 college savings plan.
Looking for additional ways to save for education? Consider a Coverdell Education Savings Account or a Custodial Account.
The 529 college savings plans listed above are offered and administered by the State. TIAA-CREF Tuition Financing, Inc. is the plan manager. Most states offer a 529 college savings plan. Before investing, check your state's website for information about any favorable state tax benefits that are only available if you invest in that state’s plan. Consider the investment objectives, risks, charges and expenses before investing in a state 529 college savings plan. Read the Disclosure Booklet containing this and other information carefully.
Investments in a state 529 college savings plan are neither insured nor guaranteed and there is risk of investment loss.
The tax information contained herein is not intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties. Taxpayers should seek advice from an independent tax advisor based on their own particular circumstances. Non-qualified withdrawals may be subject to federal and state taxes and the additional federal 10% tax.