answersLogoWhite

0


Best Answer

It is a tax-advantaged college savings plan.

529 plan history

A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1998.

State plans are OK for out of state colleges

529 Plans can be used to meet costs of qualified colleges nationwide. In most plans, your choice of school is not affected by the state your 529 savings plan is from. You can be a CA resident, invest in a VT plan and send your student to college in NC. Check to see if your institution is eligible under 529 rules.

Which states offer 529 plans?

Every state now has at least one 529 plan available. It's up to each state to decide whether it will offer a 529 plan (possibly more than one) and what it will look like, meaning 529 plans can differ from state to state. You should research the features and benefits of your plan before you invest, research state 529 plans and even compare between plans compare between plans.

Tax Benefits

As long as the plan satisfies a few basic requirements, the federal tax law provides special tax benefits to you, the plan participant.

Some states (but not all) offer tax incentives to investors as well. Research your state's tax treatment.

Types of 529 plans

529 plans are usually categorized as either prepaid or savings plans.

Savings Plans work much like a 401K or IRA by investing your contributions in mutual funds or similar investments. The plan will offer you several investment options from which to choose. Your account will go up or down in value based on the performance of the particular option you select.

Prepaid Plans let you pre-pay all or part of the costs of an in-state public college education. They may also be converted for use at private and out-of-state colleges. The Independent 529 Plan is a separate prepaid plan for private colleges.

Educational institutions can offer a 529 prepaid plan but not a 529 savings plan (the private-college Independent 529 Plan is the only institution-sponsored 529 plan thus far).

Enrolling in a 529 plan

There are two ways to invest in a 529 plan.

  1. Directly with the 529 Plan manager.
  2. Through a financial advisor.
User Avatar

Wiki User

8y ago
This answer is:
User Avatar
More answers
User Avatar

Wiki User

15y ago

* What is a 529 plan? * Are 529 plans only for my state's public colleges? * Name the top 7 benefits of 529 plans * Does a 529 plan affect Financial Aid? * What is the penalty on an unused 529 plan? * Are there gift & estate tax benefits for 529 plans? * Can I have 529 plans from multiple states? * Which is the best 529 plan available? == A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1998. == 529 Plans can be used to meet costs of qualified colleges nationwide. In most plans, your choice of school is not affected by the state your 529 savings plan is from. You can be a CA resident, invest in a VT plan and send your student to college in NC. Check to see if your institution is eligible under 529 rules...here. == Every state now has at least one 529 plan available. It's up to each state to decide whether it will offer a 529 plan (possibly more than one) and what it will look like, meaning 529 plans can differ from state to state. You should research the features and benefits of your plan before you invest, research state 529 plans...here and even compare between plans compare between plans...here. == As long as the plan satisfies a few basic requirements, the federal tax law provides special tax benefits to you, the plan participant. See the top 7 benefits of 529 plans...here Some states (but not all) offer tax incentives to investors as well. Research your state's tax treatment...here == 529 plans are usually categorized as either prepaid or savings plans. Savings Plans work much like a 401K or IRA by investing your contributions in mutual funds or similar investments. The plan will offer you several investment options from which to choose. Your account will go up or down in value based on the performance of the particular option you select. Prepaid Plans let you pre-pay all or part of the costs of an in-state public college education. They may also be converted for use at private and out-of-state colleges. The Independent 529 Plan is a separate prepaid plan for private colleges. Educational institutions can offer a 529 prepaid plan but not a 529 savings plan (the private-college Independent 529 Plan is the only institution-sponsored 529 plan thus far). == There are two ways to invest in a 529 plan. # Directly with the 529 Plan manager. See a list of 529 plans...here # Through a financial advisor. Find an advisor in our Pro Directory...here

This answer is:
User Avatar

User Avatar

Wiki User

11y ago

The purpose of 529 plans is to help families set aside money for college tuition. These plans are usually run by state or college institutions and are meant to help defray the costs of their children's further education.

This answer is:
User Avatar

User Avatar

Wiki User

9y ago

Basically a 529 plan is a savings plan set up to help you save money for your children or grandchild's college future. I always say make a plan as early as you can. Start when there young and by the time they are ready for college you can breath a sigh of relief that there financial situation is under control. The following website will help you understand the 529 plan better. http://www.savingforcollege.com/intro_to_529s/what-is-a-529-plan.php

This answer is:
User Avatar

User Avatar

Wiki User

10y ago

During the administration of Barak Obama we have seen and had several reform in both the health system as well as in the education system.The 529 Plan is one example that incorporates Government as part of its plan to help with costs in education which helps save a lot of money to american families.

This answer is:
User Avatar

User Avatar

Wiki User

10y ago

The 529 plan is a tax advantageous way of saving money over many years in preparation for your childrens' college fund. Check out the IRS website at irs.gov for a comprehensive guide of all you need to know.

This answer is:
User Avatar

User Avatar

Wiki User

6y ago

Many plans have a low monthly contribution requirement

This answer is:
User Avatar

User Avatar

Wiki User

10y ago

The 529 Savings Plan is an educational savings plan that is designed to help families save money towards future post secondary education. This type of savings plan was created in 1996.

This answer is:
User Avatar

Add your answer:

Earn +20 pts
Q: What is a 529 plan and how does it work?
Write your answer...
Submit
Still have questions?
magnify glass
imp
Related questions

What is a benefit of the 529 plan?

The 529 plan has two types of plans, either the savings plan or the prepaid plan. The 529 plan lets you save for your child's education a lot easier. The 529 plan let's you save for many different colleges.


What is the benefit of a 529 savings plan?

The 529 plan has two types of plans, either the savings plan or the prepaid plan. The 529 plan lets you save for your child's education a lot easier. The 529 plan let's you save for many different colleges.


Does the Illinois 529 Plan work like a federal grant or scholarship for students?

Illinois 529 Plan work is the best choice and is recommended by many people and recognized worldwide. It is one of the best options available to anyone.


How does a 529 savings plan work?

A 529 plan lets you set aside money for your child's education either with a financial institution or a specific school. These plans have significant tax benefits.


What 529 plan?

The "529 Plan" is a savings plan that is operated by the state or an educational institution to help save money for college. A "529 Plan" comparison is just a comparison of the different plans offered by various schools.


What is 529 plan?

The "529 Plan" is a savings plan that is operated by the state or an educational institution to help save money for college. A "529 Plan" comparison is just a comparison of the different plans offered by various schools.


What is the 529 plan?

The "529 Plan" is a savings plan that is operated by the state or an educational institution to help save money for college. A "529 Plan" comparison is just a comparison of the different plans offered by various schools.


What is the '529 Plan Comparison'?

The "529 Plan" is a savings plan that is operated by the state or an educational institution to help save money for college. A "529 Plan" comparison is just a comparison of the different plans offered by various schools.


Invest in Your Child's Future With a 529 Plan?

A 529 savings plan is a special investment that is specifically designed to help you pay for your child's education. It is important to note that there are two types of 529 plans available: Pre-paid Plans- This is a 529 plan run by a specific college, and the money invested in such a plan is intended to be used at that university. College Savings Plans- This is a state run 529 plan. The savings in a state run 529 savings plan can be used at any eligible university in the country.


Can 529 college savings plans be used on out of state schools?

No. Since the "529" refers to a section of IRS code, it is a national program. As long as the institution you want to attend is a qualified university or college it doesn't matter which state you attend in or save in.


A 529 prepaid tuition plan and a 529 college savings plan can be applied to all of the following except?

Elementary and secondary schools


Another term for a 529 plan is?

Qualified tuition plan.