5 things your clients need to know

1. Expanded use of funds

Proceeds from a 529 account can be used at any accredited college to pay for tuition, fees, room and board, books, and other qualified expenses. In addition, up to $10,000 per student per year may also be used to pay tuition at any public, private, or religious elementary or secondary school.

2. The benefits of less borrowing

A 529 account can help reduce a student's debt burden, lower monthly loan payments, and decrease loan terms.

3. The tax advantages

Pay no federal income taxes on earnings while the account is invested, and pay no federal income taxes when the money is withdrawn to pay for qualified college expenses.

4. Estate planning exclusives

In certain cases, contributions to the account can be removed from an estate for tax purposes, yet account owners retain control over the assets. This benefit is unique to 529 plans.

5. A gift of added tax benefits

A special gift tax exclusion allows five years' worth of gifts to a single beneficiary in a single year without triggering the federal gift tax.

  • Maximum for individuals is $75,000 for 2019
  • Maximum for married couples is $150,000 for 2019

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*, January 2018
** "Education Pays," The College Board, 2013