529 Plan and College Savings

Anyone can be a beneficiary of a 529 Plan: a child, a spouse, a parent, a relative, or anyone who plans to attend a post-secondary educational institution.

There is no age limit restricting who may be a beneficiary.

A 529 Plan may be appropriate for any investor who wants to reduce the impact of taxes while saving for college, including those seeking to contribute greater amounts than are permitted by Coverdell Education Savings Accounts (formerly known as Education IRAs).

Any earnings on investments in the 529 Plan can compound with federal income taxes deferred until the funds are withdrawn. If spent on qualified higher education expenses, earnings withdrawn from 529 plans in tax years beginning after December 31, 2001, and before January 1, 2011, will not be subject to federal income taxes.

Unless Congress enacts additional legislation, for tax years beginning after December 31, 2010, earnings withdrawn for qualified higher education expenses will be subject to federal income tax to the beneficiary.

The participant retains the right to specify if the beneficiary can take withdrawals from the account or the participant can retain this power over the account permanently.

This account fee is sometimes waived on accounts for which either the participant or the beneficiary is a resident of the state which the plan belongs.

A portfolio will indirectly bear its proportional share of the fees and expenses incurred by the applicable underlying mutual funds.