A 529 plan is a tax-advantaged investment vehicle in the United States designed to encourage saving for the future higher education expenses of a designated beneficiary.
Section 529 of the Internal Revenue Code permits 529 plans, often known as "qualified tuition plans," which are sponsored by states, state agencies, or educational institutions.
A 529 plan can be used to save for education by people of any age. You must be a US resident, have a legal and mailing address in the US, as well as a Social Security number or Tax ID.
There are two types of 529 plans, a prepaid tuition plan and a savings plan. At least one form of 529 plan is sponsored by each of the fifty states and the District of Columbia.
A 529 plan can be used to pay for apprenticeship programs, college, K-12 tuition, and student debt repayment. Savings from 529 plans could be applied to eligible educational costs .
The 2017 Tax Cuts and Jobs Act expanded the usage of 529 plans to include up to $10,000 per student each year for private K–12 education.
The parent or account owner has the option to change the beneficiary if the intended recipient does not enroll in college or if funds are left unused.