Education Planning

A 529 Plan allows you to either prepay tuition for qualified universities or save funds in a tax-deferred account to be used to pay higher education costs. You can do this for any child in your life -- your child, a grandchild, or cousin. You don't necessarily have to live in the state of the plan that you choose.

529 Plans allow you to put away large sums of money -- more than $200,000 in some states. Most of these plans have no age or income limitations, so higher-bracket taxpayers can participate.

Another feature is that the person who establishes the 529 Plan decides when distributions may be made. Taxes on the earnings within a 529 Plan are deferred until the money is withdrawn. Since none of the earnings or gains are taxed during the life of the plan, you receive all of the tax benefits of deferral, building a college fund much faster than you ever could if you had to pay taxes on the investment gains and income every year. When the money is used to pay for qualified college expenses, the earnings are not taxed.

You should carefully consider the investment objectives risks, charges, and expenses associated with any municipal fund securities before investing. More information about the municipal fund securities is available in the issuer’s official statement. You should read the official statement carefully before investing. Before investing you may want to consider whether you or the beneficiary's home state offers its residents a plan with alternate state tax advantages or other benefits.