529 Plan

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DEFINITION of '529 Plan'

A plan that allows for the prepayment of qualified higher education expenses at eligible educational institutions.

Also known as a "qualified tuition program," or more fully as a "section 529 plan."

INVESTOPEDIA EXPLAINS '529 Plan'

The prepayment may be in the form of a contribution to an account established specifically for paying higher educational expenses. There is no income restriction for individuals who want to contribute to a 529 plan; however, because contributions cannot exceed the amount that sufficiently covers the expenses of the beneficiary's qualified higher education, individuals should take care not to over-fund the 529 plan.

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RELATED FAQS
  1. Can I roll a Traditional IRA into a 529 college account for my grandchild?

    A 529 plan, also known as a "qualified tuition program", is an investment vehicle that allows individuals to save for education ... Read Full Answer >>
  2. What are the risks involved in a banker's acceptance?

    College savings accounts are excellent ways to encourage saving for future college costs. Contact your investment professional ... Read Full Answer >>
  3. Who benefits the most from prepaid expenses?

    Prepaid expenses benefit both businesses and individuals. Prepaid expenses are the types of expenses that are bought or paid ... Read Full Answer >>
  4. Can savings from a Roth 401(k) be used for college without penalty?

    With college tuition ever on the rise, many parents look to their retirement savings to assist with university fees. However, ... Read Full Answer >>
  5. Can 529 plans be used to transfer wealth to other family members if the original ...

    Yes, the 529 plan (also known as a "qualified tuition program") allows you to distribute and roll over funds from one 529 ... Read Full Answer >>
  6. Can I contribute to both a 529 plan and a Coverdell education savings account?

    You can contribute to both, and when your child is ready to attend college, as colleges do accept payments from both. There ... Read Full Answer >>
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