college-savings plan

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).

college-savings plan

A plan that allows individuals to set aside money in a special account designed to pay for future college expenses. Funds in the account grow tax-deferred, and withdrawals used for college expenses are exempt from federal income taxes. Parents are permitted to change from one state plan to another once a year with no penalty. Many states also offer tax incentives for these plans. Also called 529 plan.
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Consider tax-free options, such as a 529 college-savings plan.
Strong, based in Wisconsin, and another money manager, MFS Investment Management, oversee most of the $180 million in funds in the state's four college-savings plans, which offer tax advantages that encourage parents to save for their children's education.
Beginning in 2001, Colorado residents can deduct all contributions to college-savings plans from state income tax (earnings growth already is exempt).
Still, even the best deals usually have a catch, and college-savings plans are no exception.
Through its Upromise affiliates, the company also manages more than $19 billion in 529 college-savings plans, and is a major, private source of college funding contributions in America with 11 million members and more than $475 million in member rewards.

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