Life · Chapter 11 · Education Plans
Section 529 Plan
Definition
State-operated investment plans for qualified education costs. Two types: college savings plan (use at any eligible school) and prepaid tuition plan (lock in-state public tuition at today's prices). Covers higher education (college, vocational, graduate, trade) and, since 2018, K-12 expenses — capped at $20,000 per beneficiary per year beginning in 2026. Like a Roth: earnings and qualified withdrawals are federal tax-free.
Exam tip
⚠️ Old courses say "Coverdell = K-12, 529 = college only." Both now reach K-12 — the 529 K-12 draw is capped ($20,000/year per beneficiary from 2026), the Coverdell is capped on the way IN ($2,000/year contribution). "Locks in tuition" → the prepaid 529.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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