In short
A Section 529 plan is a tax-advantaged education savings plan. Earnings grow tax-free, and withdrawals are tax-free when used for qualified education expenses.
Key takeaways
- Withdrawals for kindergarten to 12th grade tuition are limited to $10,000 a year, rising to $20,000 from 2026.
- The earnings in nonqualified withdrawals are taxed and generally subject to a 10% additional tax.
- Contributions are gifts; a donor can elect to spread one contribution over five years of annual exclusions.
Where it's tested
TCP: Personal Financial Planning — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Earnings in a Section 529 qualified tuition program are: