Question

Which is a tax-free savings account that can only used

for educational expenses?
O
Federal grants
TES
Merit-based scholarships
Merit-based scholarships
A 529 plan

Answer 1

Option E. A 529 plan

Step-by-step explanation:

A 529 plan refers to an investment account which has been specifically designed for college savings and enjoys the benefit of being at a tax advantage. In other words, A 529 plan is an investment account which offers earnings that are tax-free, and also ensures that withdrawals are tax-free if the funds are for the purpose of education expenses.

In summary therefore, this plan enjoys a tax-free growth and withdrawals are made for the purpose of higher education.

A 529 plan is one of the best accounts to use when saving for higher education.