What is a 529 account?

A 529 account is a tax advantaged savings account designed to be used for a child’s education expenses. The money is accepted at most colleges and universities and can even be used for K-12, apprenticeships, and student loan repayments. They are typically established by parents or grandparents on behalf of their children or grandchildren, who would be the account’s beneficiary.
The money saved grows tax deferred, and withdrawals are tax free as long as they are for a qualified education expense.
There are two forms of the 529 plans, the education savings plans, and the prepaid tuition plan that allow you to lock in the current tuition rates.
There are no income restrictions for a 529 plan account.
Leftover funds can now be rolled into a Roth IRA account.
529 plans are sponsored and run by the individual states so the rules and fees vary state to state.
While 529 plans will appear as assets for the parents when their child applies for FAFSA, the financial aid formula caps the calculation at 5.64% which means the 529 account will have little to no impact on how much a child gets in a financial aid package.
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