529 Savings Plans*

These state-sponsored plans offer flexible, tax-deferred ways to save.

Benefits

529 savings plans offer several advantages over other savings plans.

  • States may allow contribution deductions from state income taxes.

  • Earnings are free from federal taxes if used for qualified higher education expenses.

  • In most states, earnings are free from state taxes if used for qualified higher education expenses

  • You – rather than your child – remain in control of the funds.

  • Generous contribution limits exist, regardless of income level.

  • You choose the investment strategy that is right for you and your student.

  • You can contribute to a 529 savings plan and a Coverdell Education Savings Account during the same year.

  • Your child may choose any accredited college, university or vocational school.

  • The account may be transferred to another family member.

  • Contributions are typically excluded from your taxable estate and may not be subject to gift taxes.

  • Some states may provide creditor protection. It is important to review each plan and state laws to determine if they allow creditor protection.​

Considerations

While 529 savings plans offer many benefits, there are potential drawbacks.

  • Earnings are taxed and subject to a 10% penalty when withdrawn for uses other than qualified higher education expenses.

  • The portfolio allocations may only be changed once per year or upon a change in beneficiary.​

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*Investors should carefully consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. This and other information about 529 plans is available in the issuer's official statement and should be read carefully before investing. There is also a risk that these plans may lose money or not perform well enough to cover college costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. The tax implications can vary significantly from state to state. Investors should consult a tax advisor about any state tax consequences.

Let's Make a Plan.