A 529 college savings plan is a state-sponsored program that allows parents or relatives to invest for a child's college education. These plans provide tax-deferred growth of investment earnings and allow the accountholder to withdraw funds tax free to pay for qualified education expenses (tuition, books, supplies, room and board, etc.) at most accredited colleges and universities throughout the United States. All states have their own 529 plans; most are very similar with the main difference being the investment options within each plan. You may participate in any 529 plan; residency of that particular state is not required.

There is no income limitation for contributing to a 529, and the account legally belongs to the accountholder not the child. Therefore, the parent (owner) retains control and has the ability to change beneficiaries to another child without taxable consequences. Federal law prohibits the owner from having direct control over the investment selection, so each state typically works with an investment manager who offers a wide array of investment options for the owner to choose from.

 

For more information on 529 college savings plans, please contact our office at 864-331-4400 or email client-relations@j-freeman.com.