Question

Type the correct answer in the box. Spell all words correctly.

Which plan offers a tax-free education?
A_________Plan is a plan that offers a tax-free education, even upon withdrawal. However, the use of the money is
limited and can only be used for education expenses.

Answer 1

529

Step-by-step explanation:

A 529 plan is a plan to encourage savings for future education expenses. The money saved in a 529 plan is not subject to taxation as long as it will be used for education purposes.

Parents, grandparents, or guardians can open 529 savings account for a child, who will be named as the beneficiary. The contributor of funds to the account may be eligible for a state tax deduction for contributing to a 529 plan. The gains on the accounts are exempt from tax if they are to be used on education expenses.