What Is a 529 Plan?
A 529 plan is a college savings account that’s exempt from federal taxes as long as the savings will be utilized for college expenses for a designated beneficiary. These plans often have tax benefits at the state level for in-state residents. Each state has a specific total contribution limit (typically a few hundred thousand dollars).
Any U.S. citizen or resident alien adult can open a 529 account. The beneficiary can be a child, a grandchild, a younger relative; an adult can also open a 529 plan to save for his or her own college expenses.
Typically within each state there are often multiple plans from which to choose from. Many state plans are sold nationally, regardless of where the account owner lives. You therefore should not limit yourself to only your state’s offerings, particularly if you live in a state with no income tax.