What Is a 529 Plan?

A 529 plan is a state-sponsored savings account designed to help pay for education expenses. Contributions are made with after-tax dollars, but your money grows tax-free and withdrawals for qualified education expenses (tuition, books, room and board) are tax-free. Many states offer a deduction or credit for contributions to their own state's plan. Starting in 2024, unused 529 funds can be rolled over to a Roth IRA (subject to limits). K-12 tuition up to $10,000 per year also qualifies as a 529 expense at the federal level.