529 Plan and College Savings

Posts Tagged ‘definition of a 529 plan’

What is a 529 Plan?

This definition of what a 529 Plan is comes from the SEC. A 529 Plan is a tax-advantaged savings plan designed to encourage saving for future college costs.

529 plans, legally known as “qualified tuition plans”, are sponsored by:

• states,
• state agencies, or
• educational institutions

These plans are authorized by Section 529 of the Internal Revenue Code.

How many types of 529 plans are there?

There are two types of 529 plans:

• pre-paid tuition plans and
• College Savings Plans.

All fifty states and the District of Columbia sponsor at least one type of 529 Plan. In addition, a group of private colleges and universities sponsor a pre-paid tuition plan.