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![]() ![]() ![]() Overall, rules and benefits for 529 plans vary by state and based the 529 savings plan you choose, so it is always important to do your research to see which plan best aligns with your family’s needs.Įducation Tax Break: Coverdell Education Savings Accounts (ESAs)Īnother way to save for college is through a Coverdell Education Savings Account (ESA). There are also specific plan beneficiary requirements. ![]() However, there are rules governing these 529-to-Roth rollovers, one of which is that you had to have to 529 plan for at least 15 years. So, your child or grandchild might be able to eventually benefit from your 529 contributions, even if they don't use the funds for education. What if my child doesn't go to college? Starting in 2024, up to $35,000 (lifetime limit) can, under a provision in the SECURE 2.0 Act, be rolled over from a 529 plan to a Roth IRA. You may change the beneficiary of the 529 savings plan if needed (transfer the plan to another individual).You may use your 529 savings plan to pay for trade school.You may use up to $10,000 for private K-12 education.Parents and guardians may be able to use the savings to pay for other types of education. The rules for 529 savings plans don't always limit qualifying education expenses to college tuition or books. That means you may not need to pay state income tax on the money you use to fund your 529 plan. Some states also allow you to deduct your 529 plan contributions from your taxable income. That means you won't need to pay federal taxes on the income you earn from your 529 plan (as long as you use it for qualified education expenses). While investment income is generally taxable, income from investments in a 529 college savings plan is not. ![]()
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