Qualified Tuition Plans (sometimes referred to as Section 529 plans) are plans established to help families save and pay for education expenses in a tax-advantaged way and are available to everyone, regardless of income.

These plans, also known as qualified tuition programs (QTPs), allow taxpayers to gift large sums of money for a family member’s education expenses, while continuing to maintain control of the funds. The earnings from these accounts grow tax-deferred and are tax-free, if used to pay for qualified education expenses. Prior to 2018 only college education expenses were eligible expenses. Starting in 2018, elementary and high school expenses are also eligible.

529 plans can be used as an estate-planning tool as well, providing a means to transfer large amounts of money without gift tax. With all these tax benefits, 529 plans are an excellent vehicle for funding education.

Related IRC and IRS Publications and Forms