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Plus, 529 savings plan contributions can be invested, similar to the structure of a 401(k), and any investment profits used to pay for qualified education expenses are 100% tax-free.
A 529 plan is a tax-advantaged way for parents to save for their children’s education expenses. The IRS doesn’t impose a contribution limit on 529 plans, unlike for other tax-advantaged ...
529 college savings plans are operated by the states, which means that each state can set its own aggregate contribution limit. In simple terms, this is the maximum total amount of money that can ...
For example, a 529 plan in which $2,000 is deposited each year for 18 years would accumulate over $4,000 in fees with a 1.1% expense ratio but only $1,400 in fees with a 0.4% expense ratio – a savings of $2,600. Generally, direct-sold 529 plans have lower fees than advisor-sold 529 plans. [27]
Key takeaways. 529 plans are tax-advantaged accounts that allow a beneficiary to use the funds for qualified education expenses. Funds contributed to a 529 plan are allowed to grow tax-deferred.
The average cost of tuition and fees at four-year private colleges and universities has grown from $34,970 for the 1994-1995 school year to $58,600 for 2024-2025, according to CollegeBoard.
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