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ARTICLE · 22 MARCH 2024

529 Rollover Opportunities

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As described in Section 529 of the Internal Revenue Code ("Code"), a 529 plan is a tax-advantaged state-sponsored plan designed to help individuals save for education...

United StatesEmployment and HR
Kutak Rock
Kutak Rock

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As described in Section 529 of the Internal Revenue Code ("Code"), a 529 plan is a tax-advantaged state-sponsored plan designed to help individuals save for education by providing tax-free investment growth of after-tax contributions and tax-free withdrawals of principal and earnings for qualified education expenses. There are two different types of 529 plans: prepaid tuition plans and savings plans.

Ten states currently offer prepaid tuition plans, which allow participants to prepay tuition and fees at today's rates, effectively "locking in" prices at eligible universities. An account owner can purchase up to five years of tuition for a beneficiary, which is paid to the university when the beneficiary enrolls. However, these plans can be very restrictive, and the funds are often not transferable if the beneficiary elects to attend an out-of-network university. By contrast, 49 states and Washington, D.C.

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