A 529 education savings plan is a tax-advantaged account designed to help families put away money for future education expenses. 529 education savings plans generally offer a mix of investment options. In addition to offering the potential for tax-free growth, withdrawals from 529 plans, including any earnings, are free from federal tax, and potentially free from state and local tax when used for qualified higher education expenses such as tuition, room and board, computers, and books or supplies.1 Keep in mind that, as with any investment, a 529 can lose money.
Tip: Some states offer state tax deductions for contributions made to in-state plans; check with your state before choosing a plan.
Prepared with these answers, you and your child can start planning for college with the confidence that comes from knowing how to make good choices for the future—no matter how close that future may be.