What are 529 plans?
A 529 plan 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 is for a designated beneficiary, such as a child or grandchild.
The primary benefit of 529 plans is that the earnings are not subject to federal tax, and are generally not subject to state tax when used for the qualified education expenses of the designated beneficiary.
Distributions from 529 plans are generally reported on Form 1099-Q.