What are 529 plans?
A 529 plan (also called qualified tuition plan (QTP)) is operated by a state or educational institution with tax benefits and other potential incentives, making it easier to save for college and other post-secondary training. The plan can be for yourself or a designated beneficiary, such as a child or grandchild.
The primary benefit of 529 plans is that the earnings aren’t subject to federal tax, and are generally not subject to state tax when used for the beneficiary’s qualified education expenses.
Distributions from 529 plans are generally reported on Form 1099-Q.