Saving for College

529 plans help families save for future education expenses in a tax-advantaged account. This means your parents, guardians, family members or others can save for your education by contributing money into a 529 account and any earnings in your account (money added to your account with interest or investment returns) will be tax-deferred and distributions are tax-free when used for qualified college education costs.

Using a 529 Plan:

• Can be used at any college
• Can be used for any college expenses
• Offer some tax advantages
• Have no guarantee of earnings

Prepaid tuition plans are a form of a 529 plan, which allow parents and others to save for tuition and fees at specific colleges. These plans are usually offered by state governments, but there are some offered by private organizations.

Using a Prepaid Tuition Plan:

• Allow the purchase of a future college education based on today’s costs
• Requires the student to attend a college included in the selected plan to receive full benefits
• Is often limited to use for only tuition and fees
• Offers some tax advantages

Coverdell Education Savings Accounts, also called Education IRAs, is a trust or custodial account created for paying qualified education expenses on behalf of the account beneficiary. Total contributions made to an account cannot exceed $2,000 a year per student. While contributions are not tax-deductible, earnings can be withdrawn tax-free to be used for education. Contributions to these accounts are limited based on income.

Coverdell Education Savings Accounts, also called Education IRAs, is a trust or custodial account created for paying qualified education expenses on behalf of the account beneficiary. Total contributions made to an account cannot exceed $2,000 a year per student. While contributions are not tax-deductible, earnings can be withdrawn tax-free to be used for education. Contributions to these accounts are limited based on income.