In this article, we will explore the benefits of 529 college savings plans and how they can help families save for higher education expenses. A 529 plan is a tax-advantaged investment account specifically designed to save for future education costs. These plans are named after Section 529 of the Internal Revenue Code, which governs their tax treatment. One of the recent changes to 529 college savings plans is that money can now be converted into a Roth individual retirement account tax-free, providing even more flexibility for savers.
A new law, which became effective January 1, 2024, has made 529s a relatively more attractive way to set money aside for a child's education. The funds saved in a 529 plan can be used for a wide range of education expenses, including tuition, books, fees, and room and board. In addition, withdrawals from a 529 plan are tax-free as long as the money is used for qualified education expenses. This can result in significant savings over time.
May 29 is recognized annually as National 529 College Savings Plan Day. During the month of May, 529 plans across the country celebrate with special events, promotions, and education resources to raise awareness about the benefits of saving for education. The Nebraska State Treasurer's Office is encouraging Nebraskans to consider 'NEST 529' savings plans to help you pay for post-secondary education for yourself or a loved one.