Up to $10,000 annually per student, in aggregate from all 529 plans, can be withdrawn free from federal tax if used for tuition expenses at a public, private or religious elementary, middle, or high school.

How long can you keep a 529 plan?

Money can stay in the account and could eventually be used for graduate school — even if that is 10 or 15 years later. In fact, the money can remain in the plan indefintely as long as there is a living beneficiary. Money in the account can also be used by other members of your family.

Can you withdraw money from a 529 plan for college?

The plan allows money in the account to grow tax-deferred and may be withdrawn tax-free if used for qualified education expenses at eligible institutions. In addition, many states offer their own tax benefit, allowing you to deduct the contributions from your state taxes.

When to take your child out of 529 plan?

Your child’s may decide to go to college a few years down the line. It’s traditional for students to enter college within a year or two of graduating from high school, but not everyone takes that path. Some students hope to gain work experience, join the military or grow a business after high school.

What happens if I take a 529 distribution in December?

If you withdraw the 529 money in December for a tuition bill that isn’t paid until January, you risk not having enough QHEE during the year of 529 withdrawal. Likewise, if you take a distribution in January to pay for expenses from the previous December, that distribution will be a non-qualified distribution.

Is the 529 college savings plan a good idea?

While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. The 529 college savings plan is one of the best ways to set aside money for your children’s college education.