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What are 529 plans?

SOLVEDby TurboTax1750Updated December 16, 2021

A 529 plan (aka qualified tuition plan or QTP) is operated by a state or educational institution with tax benefits and other incentives, making it easier to save for college, post-secondary training, and K–12 education expenses.

Formerly limited to higher education, 529 plan distributions can be used toward qualified K–12 expenses — up to $10,000 per student — in tax years 2018 through 2025.

You can set up a 529 plan for yourself or a designated beneficiary, such as a child or grandchild. Earnings on 529 plans aren’t taxed by the federal government nor most states, as long as the distributions are used toward qualified education expenses.

Distributions from 529 plans are generally reported on Form 1099-Q.

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