529 college savings plan

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529 College Savings Plan

An account into which persons deposit funds to save for university-related expenses. The funds in a 529 college savings account are tax-deferred and, if used directly to pay for college, tax exempt at the federal level. They are sometimes exempt at the state level as well. The plan exists in an attempt to make post-secondary education more affordable. See also: IRA, 401(k).

529 college savings plan.

Each 529 college savings plan is sponsored by a particular state or group of states, and while each plan is a little different, they share many basic elements.

When you invest in a 529 savings plan, any earnings in your account accumulate tax free, and you can make federally tax-free withdrawals to pay for qualified educational expenses, such as college tuition, room and board, and books at any accredited college, university, vocational, or technical program in the United States and a number of institutions overseas.

Some states also exempt earnings from state income tax, and may offer additional advantages to state residents, such as tax deductions for contributions.

You must name a beneficiary when you open a 529 savings plan account, but you may change beneficiaries if you wish, as long as the new beneficiary is a member of the same extended family as the original beneficiary.

In most cases, you may choose any state's plan, even if neither you nor your beneficiary live in that state. There are no income limits restricting who can contribute to a plan, and the lifetime contributions are more than $300,000 in some states.

You can make a one-time contribution of $60,000 without incurring potential gift tax, provided you don't make another contribution for five years. Or, you may prefer to add smaller amounts, up to the annual gift exclusion.

References in periodicals archive ?
In the first group are the State Qualified Tuition Programs, the Educational IRAs, and the Series EE US Savings Bonds.
An individual who contributes funds to a qualified tuition program can enjoy many benefits, such as taxfree savings for a beneficiary's education.
Contributions to IDeal are deductible from Idaho state income tax, subject to recapture in certain circumstances, such as a non-qualified withdrawal or a rollover to another state's qualified tuition program in the year of the rollover and the prior tax year.
If you are not an Indiana taxpayer, consider before investing whether your or the beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.
SMART529 is a qualified tuition program issued by the West Virginia Prepaid College Tuition and Savings Program Board of Trustees and administered by Hartford Life Insurance Company.
North Carolina's National College Savings Program is a program of the State of North Carolina, established and maintained by the North Carolina State Education Assistance Authority (Authority) as a qualified tuition program under federal tax law, and administered by College Foundation, Inc.
If you or your Beneficiary live outside of Maryland, you should consider before investing whether any college savings program offered by your home state or the state where you are employed offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.
If you reside in or have taxable income in a state other than West Virginia, you should consider whether your state has a qualified tuition program that offers favorable state income tax or other benefits exclusively to your state's program that are not available under the SMART529 program.
If you are not a Hawai'i taxpayer, consider before investing whether your or the beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.
SMART529 Select is a qualified tuition program, as defined under Section 529 of the Internal Revenue Code, which offers flexible features in addition to the numerous tax advantages inherent in 529 plans.
Qualified Tuition Programs, or Section 529 plans, let you save and invest money that's exempt from federal taxes.
14) CS/HB 599 expanded the exemption to "[a]ll qualified tuition programs authorized by s.

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