529 plans are designed to encourage saving for college.
529 plans are sponsored by states, state agencies, and educational institutions, and are authorized by Section 529 of the Internal Revenue Code.
my529 is a nonprofit 529 plan established and sponsored by the State of Utah.
Benefits of 529 plans
529 plans provide important advantages to account owners and beneficiaries.
- Earnings aren’t subject to federal or state tax when used for qualified higher education expenses, such as:
- Tuition and mandatory fees
- Computers, peripheral equipment, educational software, and internet access
- Books, supplies, and required equipment
- Room and board for students enrolled at least half-time
- K-12 tuition expenses at public, private, or religious schools
- Many states offer tax credits or deductions on contributions.
- Enrollment is open all year.
- Account owners—not the beneficiary—control their accounts.
- There are no age, income, or residency restrictions.
- Plans typically offer a range of investment options.
- Withdrawals can be used at any eligible higher education institution.
- 529 funds can be used for college, university, post-secondary vocational or technical school, or graduate school.
- Funds can be used for tuition at K-12 schools.
- Saving is less costly than borrowing.
“A low- and moderate-income child who has school savings of $1 to $499 … is about four times more likely to graduate from college.”
Assets and Education Initiative. (2013). Building Expectations, Delivering Results: Asset-Based Financial Aid and the Future of Higher Education. In W. Elliott (Ed.), Biannual report on the assets and education field. Lawrence, KS: Assets and Education Initiative (AEDI).