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What is a 529 Plan?

A 529 Plan is a savings vehicle designed specifically for higher education expenses. The name “529” comes from Section 529 of the federal tax code, which authorizes states to offer the plans. There are two types of 529 Plans – Prepaid and Savings, and both Prepaid Plans and Savings Plans are authorized 529 college savings plans. Earnings in 529 Plans are tax-free when they are used for Qualified Higher Education Expenses. In general, qualified expenses include tuition, fees, room and board, and the cost of books, supplies and equipment required for the enrollment or attendance at an Eligible Educational Institution, including undergraduate, graduate, and vocational/technical schools.