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529 Plan

August 22, 2026 · Aditya Gupta

Personal Finance

A 529 plan is a tax-advantaged education savings account. Contributions grow tax-free; withdrawals for qualified education expenses (tuition, room and board, books, computers) are tax-free. Two types: Education Savings Plans (most common, invest in mutual funds) and Prepaid Tuition Plans. State tax deductions vary — most states offering them require using the in-state plan. No federal contribution limit, but excessive contributions face gift tax implications ($19K/year/donor 2026 annual exclusion). Up to $10K/year per beneficiary can fund K-12 tuition. Secure Act 2.0 allows rolling $35K of unused 529 to Roth IRA (subject to limits). Account ownership doesn't transfer to beneficiary.

Personal Finance

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