529 plans
A 529 plan is a savings option that can help you save for college, offering tax benefits while allowing you the freedom to focus on other financial goals. These plans are sponsored by states, state agencies and educational institutions.
How can a 529 plan help?
When you invest in a 529 plan, you can enjoy special tax benefits. Your earnings won't be subject to federal taxes, and in most cases, state taxes as long as you put your withdrawals toward education expenses.
States sponsoring 529 plans may offer their own tax benefits on 529 plan contributions, including income tax deductions, tax credits and/or other benefits like matching grants. Typically, you'll only be eligible for these benefits if you invest in a 529 plan sponsored by your state of residence or the state in which you pay taxes.
Types of 529 plans
529 prepaid tuition plan
- Allows you to buy college credits in advance at certain educational institutions at the current tuition rate.
- May be subject to residency restrictions.
529 college savings plan
- Your education savings will be invested on your behalf
- Money can be used at any college or university
- Is not subject to residency restrictions for purchases
Planning to save for college
A financial advisor can help you determine the most important things you'll need to know about your 529 plan – how much you need to save, which type of 529 plan would be best for you, the type of school you wish to save for and how much assistance you plan to provide.
The Section 529 College Saving Plan provisions of EGTRRA that were scheduled to sunset have been made permanent by the Pension Protection Act of 2006. . When evaluating Section 529 College Savings Plans, you should consider investment objectives, risks, charges and expenses associated with 529 plans carefully before investing, as well as any state income tax benefits offer by your own state’s plan. More information about 529 plans is available in the issuer’s official statement which should be read carefully before investing.
Financial planning services and investments offered through Ameriprise Financial Services, Inc., Member FINRA and SIPC.
Related information
How much will you need?
The cost of college, inflation, financial aid and years to save are all factors.
Calculate college expenses
Saving for college?
Consider different college savings strategies to suit your needs and goals.