A 529 plan is a tax-advantaged investment vehicle (typically sponsored by states or state agencies) designed to encourage saving for the future education expenses of the plan’s beneficiary. A 529 plan can be used to pay for qualified education expenses at most accredited colleges and universities, as well as tuition expenses at both public and private elementary and secondary schools (K-12). 529 plans can also be used for certain apprenticeship programs or to pay principal or interest on a qualified education loan. There is no cap for qualified college expenses. For K-12 tuition there is an annual cap of $10,000. For apprenticeship programs or loan payments, there is a lifetime cap of $10,000 per beneficiary.
Pricing & Fees
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Gift Tax Exclusion
Contributions to a 529 plan qualify for the annual federal gift tax exclusion, up to $18,000 for 2024. You may elect to pre-fund the plan with a lump-sum payment over five years (free of gift tax) according to the five-year election provision:
| Lump-sum Payment | |
| Filing Single | $90,000 |
| Filing Joint | $180,000 |
Beneficiary Guidelines
With a 529 plan, in most cases, the beneficiary of the account does not have rights to the assets in the account; assets are property of the account owner. The account owner may change the beneficiary of the funds at any time, though this is limited to a first cousin or closer relative (to avoid tax consequences).
Investments
You may select from the investments offered by the 529 plan; the plan manager determines the investment of assets. Investments accumulate tax-deferred and funds can be withdrawn at any time.
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