529 Plan

A 529 plan is an investment vehicle designed specifically for educational savings, offering significant tax advantages. These plans are state-sponsored and can vary by state in terms of tax treatment and investment options. Contributions to a 529 plan are not federally tax-deductible, but many states offer deductions on state income tax. The funds grow tax-free and distributions for qualified educational expenses are also tax-free. These plans are not subject to income limitations, allowing anyone, regardless of income level, to contribute. The account owner retains control over the funds and can change the beneficiary to another family member if needed. Contributions are subject to annual gifting limits, but overall, 529 plans provide a flexible and tax-efficient way to save for education costs.