A 529 plan is a mechanism to save for college education. Many states have a 529 plan. The attraction is you can invest money in the plan and it grows tax free plus can be withdrawn tax free. The money must be used for a qualified education expense. Examples are college tuition, books, room and board. Below is just one of the many websites listing qualified expenses.
https://www.savingforcollege.com/article/what-you-can-pay-for-with-a-529-plan
What if a child isn’t going to go to college yet money has been saved? How do you avoid a penalty and taxes? A recent example cited in Kiplinger’s Retirement Report, August 2018, was a grandson diagnosed with autism.
- Name a new beneficiary to the 529 plan to use the funds
- The beneficiary attends a U.S. military academy
- You can withdraw $10,000 annually to pay tuition from Kindergarten through 12th grade
- Potentially transfer 529 money, up to $15,000 to an A.B.L.E for people who develop a qualifying disability before age 26.