1) Who can setup a 529 plan?
a) Anyone can setup a plan. Typically it is setup by a parent or a grandparent.
2) Who can be a beneficiary of a 529 plan?
a) The beneficiary can be anyone including yourself.
3) What are the main benefits of a 529 plan?
a) Income earned on money in a plan is non taxable.
b) Contributions to a 529 plans are not deductible on a federal return but over 30 states allow deductions on your state return.
4) What types of expense qualify for a distribution?
a) Tuition and fees.
b) Room and board but off campus living expenses are limited to cost of on campus room and board.
c) Textbooks that are required for courses.
5) Can the beneficiary be changed?
a) Yes you can change beneficiaries at any time.
b) If a beneficiary is finished with higher education you can easily change the beneficiary to someone who has not started or is not finished.
6) Each 529 plan account has one designated beneficiary. What does that mean?
a) A designated beneficiary is usually the student or future student for whom the plan is intended to provide benefits. The beneficiary is generally not limited to attending schools in the state that sponsors their 529 plan. But to be sure, check with a plan before setting up an account.
7) What is an eligible educational institution?
a) An eligible educational institution is generally any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education.
8) When is a good time to setup a plan?
a) There are many factors to consider. For example your other financial needs, your tax rates, state benefits and more. But if a 529 plan is right for you remember since the savings are on income earned the sooner you set up a plan the larger the potential for savings.
9) Who controls the plan?
a) Whoever sets up the plan is the custodian.