529 College Savings Facts:
- After-tax money grows tax free (think of Roth IRA contributions)
- Money used for qualifying withdrawals will not be taxed
- Qualifying withdrawals include: traditional 4-year universities, graduate school, community college, trade school, etc.
- Non-qualifying withdrawals will be taxed and incur a 10% penalty
- The initial principle investment was made with after tax dollars so that portion will never be taxed or penalized
- Withdrawals can be made up to the amount equal to scholarships received
- No penalty is paid, however you will be taxed on the growth of the investment
- The initial principle investment was made with after tax dollars so that portion will never be taxed or penalized
- Beneficiaries can be changed
- Your state does not matter
- You can contribute to any state’s 529 plan regardless of your state residence
- You can use your 529 plan to pay for school in any state regardless of which state’s 529 plan you invested in