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A 529 plan is an investment account where you can set money aside for a loved one's education expenses and receive tax benefits. The money in your 529 account can grow on a tax-deferred basis and can be withdrawn tax-free if it is being spent on a qualified expense.
Here's an easy cheatsheet of qualifying expenses:
Types of 529 Plans
Choosing a 529 Plan
Every state offers a 529 plan, and you are not required to use the plan offered by the state you reside in. Each plan has a different investment strategy and you should select one that aligns with your timeline and risk tolerance. Someone with a low risk tolerance should not invest in a 529 plan with a more aggressive investment portfolio.The best strategy is to reach out to us directly. We can walk you through the options and find an appropriate 529 plan for you.
Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawls used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.