NEWBERRY COUNTY — Setting up a 529 account is a good way to save for education costs, according to KHEAA. These education savings accounts get their name from the governing section of the federal tax code.
While many people think of saving for college when it comes to a 529 account, that isn’t the only option. Some states’ 529 plans let people save for K–12 education, as well as for college. The funds from some plans may also be used to pay for apprenticeship programs, or even to repay college loans.
Accounts don’t always have to be opened by parents. Grandparents and other relatives can open accounts for children. In some states, adults can open accounts to save for their own college education.
Money withdrawn from a 529 account is generally free of federal tax, as long as it is used for qualified educational costs. Qualified costs usually include tuition and fees, room and board, books, computers and certain expenses for special-needs students.
Withdrawals may also be exempt from state taxes, depending on where the account holder or beneficiary lives.
People who are considering setting up a 529 account should find out what their state offers. They can also check into 529 accounts that aren’t limited to specific states.
KHEAA a public, non-profit agency established in 1966 to improve students’ access to college. It provides information about financial aid and financial literacy at no cost to students and parents.