In a nut shell, Qualified Tuition Programs (QTPs), also known as 529 Plans, allow taxpayers to make contributions to an account to be used to pay higher education costs. Although contributions to a qualified plan are not deductible in the year made, distributions of earnings are excluded from income as long as they are used for higher education purposes.
529 Plans can be a great way to save and earn money for your children’s education. Morningstar recently conducted their annual review of the largest 529 college-savings plans and have pin-pointed 27 they believe are likely to outperform their peers. See “ Morningstar Names Best 529 College-Savings Plans for 2012 ” for details of their review and plan ratings.
Give us a call for any questions you may have on the tax aspects of 529 Plans and other education savings tools.