529 Plans: Conclusion

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By Denise Appleby

Similar to the education savings account (ESA), the 529 plan is an excellent way to save for education expenses.

Let's recap:

  • 529 plans allow for the prepayment of qualified higher-education expenses at eligible educational institutions.
  • There are no income restrictions for individuals who want to contribute to a 529 plan; however, because contributions cannot be more than the amount necessary to provide for the qualified higher-education expenses of the beneficiary, individuals should take care not to contribute too much to the 529 plan.
  • An individual may contribute up to $13,000 each year to a designated beneficiary’s 529 plan without incurring federal gift tax, provided that the individual makes no additional gifts to that designated beneficiary for the year.
  • The distribution from the 529 plan may be used for:
    • tuition and fees
    • books, supplies and equipment
    • academic tutoring
    • room and board
    • uniforms
    • transportation
Materials on each State's 529 plan are available from the College Savings Plans Network’s (CSPN) website at www.collegesavings.org.



by

Denise Appleby

Denise Appleby
Denise Appleby is founder and owner of Appleby Retirement Consulting,which provides technical consultation, content, coaching, writing, editing and training services on related topics.


With more than 14 years of experience in the IRA and defined-contribution plans fields, Appleby has held several senior retirement-plan related positions with Pershing LLC, which included vice president of plans products and services, retirement plans manager, trainer, training manager, compliance consultant, technical help desk manager and writer.
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