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the school itself to see what expenses qualify for payment from a 529 Savings Plan.
The nice thing about this plan is that there are no age or income restric- tions, and although the plans are offered by individual states, there is no residency restriction, which means that if you live in one state, you are allowed to participate in a plan offered by another state.
Benefits:
• A 529 Savings Plan can create a tax shelter for the beneficiary.
• Interest and qualifying withdrawals are tax exempt.
• Anyone can open an account, contribute, and be listed as the beneficiary.
• The owner of the account (the donor) is always in control of the money.
• Beneficiaries can be changed easily and as often as once a year.
• The funds are not considered to belong to the beneficiary so they do not affect applications for college financial aid.
• Some employers now partner with these programs so contributions can be deducted automatically from your paycheck. Check with your employer.
• Contribution limits are high, as much as $300,000.
Drawbacks:
• Investment choices are quite limited. The choice is generally between mutual funds or annuities.
• In some cases, the choices are based on the age of the beneficiary.
• The name of the plan refers to a tax loophole in the IRS code’s section 529
There's More to an Education