529 Plan

A 529 plan is a tax-advantaged college savings plan. A 529 plan is introduced to encourage people to save for college because of the ever increasing cost of attending college. A 529 plan is sometimes known as a qualified tuition plan and there are two basic types of a 529 plan.

The rules of a 529 plan is laid out in the Internal Revenue Code Section 529. A 529 plan is usually sponsored by a state, state agency, or educational institution.

Two types of 529 plans

Generally, there are two types of 529 plans: the prepaid programs and the savings programs. The latter type of 529 plans is more common and is also known as the College savings plans. A 529 college savings plan is usually sponsored by a state while a prepaid tuition plan is often sponsored by a group of private colleges or universities. Below are resources on the 529 plan.