A 529 college savings plan lets you save money for a child's college or graduate school education in an individual investment account. Anyone can open an account with a particular plan and name someone as beneficiary. The beneficiary does not need to be related to you. The person who opens the account maintains control of the account, unlike a UTMA.
Contributions grow tax deferred
Withdrawals used for the beneficiary's qualified education expenses are federal income tax free
Contributions receive favorable federal gift and estate tax treatment
Funds can be used at virtually any college
Participation is not restricted by income level
Total lifetime contributions limits are high
Professional money management
Investors should carefully consider the investment objectives, risks, charges and expenses associated with 529 plans before investing. This and other information about 529 plans is available in the issuer's official statement and should be read carefully before investing. There is also a risk that these plans may lose money or not perform well enough to cover college costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. The tax implications can vary significantly from state to state. Investors should consult a tax advisor about any state tax consequences.
A Coverdell Education Savings Account (ESA) offers a way to save for a child's education — from elementary/secondary all the way up to post-graduate studies — with tax-free earnings until funds are distributed.
ANB sets up ESA offerings as a one-year IRA
$2,000 per year maximum contribution
After the child is 18 years old, you can no longer make contributions to this account
The money must be used strictly for qualified educational expenses
There are limits on the amount that any individual can contribute for any one designated beneficiary for each year