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What is a 529?

WHAT IS A 529? Saving and investing for college the smart way In today's world, college costs are soaring and graduates are getting crushed under student loan debt. If you're helping your child or loved one save for a college education, it's important that you understand what a 529 college savings plan is and how one could help you reach your savings goals. What is exactly a 529 college savings plan? A tax-advantaged college savings plan sponsored by a state or state agency. Savings are used for tuition, rent and food, and other qualified higher education-related expenses, such as books and computer equipment. 星 Who's it for? Any future college student with a Social Security number or tax ID. If the student decides not to attend college or doesn't use all of the money, the account owner of the 529 can transfer XXXXXXXX the account at any time to another eligible member of the student's family. XXXXXXXX Who can open a 529? While parents are usually the account holders, grandparents, other family members, or family friends can also open a 529. What's smart about saving in a 529 plan? IT'S AN INVESTMENT: The money you save in a 529 is invested in a way that works for you given your savings goals and risk tolerance. Compared to a regular savings account, a 529 account can provide a greater opportunity to grow and compound your savings over time. There are also great tax advantages:* • Any earnings grow federal income tax-deferred. • Distributions are federal income tax-free. Savings in a 529 have a relatively small effect on federal financial aid eligibility because they are considered assets of the parent, not the student. Some plans offer gifting options too-so family and friends can contribute to a child's 529 account. Withdrawals from a 529 can be taken at any time but should be used for qualified higher education expenses. Be aware that if the withdrawal is not used for those purposes, earnings are subject to taxes and a 10% penalty. How to start You can invest in a 529 plan from most states and use that money at most accredited colleges across the country. Be sure to research all of your options, including your own state's plan for potential tax benefits. When saving for college, try to start early and save regularly. A 529 is a great option for anyone looking to provide their children, grandchildren, or loved ones with a confident financial future for college studies. 529 plan units are municipal fund securities and are subject to market fluctuation and volatility. *To qualify for the tax advantages, the money in the 529 must be used for approved college expenses. Qualified expenses include: tuition, room and board (on or off campus), fees, books, supplies, equipment (including computers), and special needs/services expenses. Consult IRS.gov Publication 529 for additional details. Fidelity Brokerage Services Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917 © 2017 FMR LLC. All rights reserved. 805862.1.0 |000

What is a 529?

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