A few more important facts about 529 college savings plans:

  • Once a 529
    plan is set up, the contributions are invested on behalf of the account holder
    through options like stock mutual funds, bond mutual funds and money market
    funds. 
  • There are no age limits on the
    beneficiaries of 529 plans, so both children and adults may utilize them.
  • 529 contributions are not tax-deductible;
    however, the earnings from the 529 plan are not subject to federal tax as long
    as the withdrawals are used for eligible college expenses.  
  • If you
    withdraw money from a 529 plan and do not use it on eligible college expenses,
    you will be subject to income tax and an additional 10% penalty on the
    earnings.  
  • 529 balances may be transferred between beneficiaries as long
    as they are used for eligible college expenses.

 

Happy saving!