1. 529 Plans: Introduction
  2. 529 Plans: Types of Plans
  3. 529 Plans: Eligibility
  4. 529 Plans: Contributions
  5. 529 Plans: Distributions
  6. 529 Plans: Conclusion

There are two types of 529 plans:

  • Prepaid tuition programs, which may be offered by the state to be used at an eligible state educational institution. Prepaid tuition programs allow for the advance purchase of credits covering tuition for the designated beneficiary. These are usually established during enrollment periods established by the state or the eligible educational institution. Since 2004, individual educational institutions can offer their own plans. In addition, the Private College 529 Plan is offered by nearly 300 private colleges and universities, allowing the tuition certificates to be used at any one of them.
  • College savings plans allow contributions to be made to the account on behalf of the designated beneficiary. These can usually be established at any time, including immediately after the designated beneficiary is born. They can be used at any eligible educational institution, public or private.

Individuals should review the feature and benefits of both types of 529 plans to determine which is more suitable for the designated beneficiary.

The designated beneficiary under a 529 plan is the student for whom the plan is established. The designated beneficiary can be changed to another eligible person. Typically, the designated beneficiary is changed if the current designated beneficiary will not need the funds in the 529 plan for eligible education expenses. If a state or local government or certain tax-exempt organizations purchase an interest in a 529 plan as part of a scholarship program, the designated beneficiary is the person who receives the interest as a scholarship.

For purposes of a 529 plan, an eligible educational institution is any college, university, vocational school or other post-secondary educational institution eligible to participate in a student aid program administered by the Department of Education. This includes virtually all accredited public, nonprofit and proprietary (privately owned profit-making) post-secondary institutions.

Certain educational institutions located outside the United States also participate in the U.S. Department of Education's Federal Student Aid (FSA) programs.

Individuals should check with the educational institution and check into the Federal School Code List to determine if it is an eligible educational institution for 529 plan purposes.

529 Plans: Eligibility
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