- 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 $14,000 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
Materials on each State's 529 plan are available from the College Savings Plans Network's (CSPN) website at www.collegesavings.org.
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