College savings plans, also called 529 plans, are accounts specifically designed to help you save for education expenses in a tax-advantaged way.
Here's how it works. A 529 college savings plan is an investment account that you can use to save for your child’s college. You can now also use it for K-12 expenses.
529 plans are usually sponsored by states. So if you live in DC, DC has its own529 plan. There’s also a 529 Maryland plan and a 529 VA (Virginia) plan. Here is how it works:
You create and control an account on behalf of your beneficiary or future student. You make contributions to your account using after-tax dollars. Investments grow tax-deferred, and earnings are tax-free when used for qualified education expenses. That means you can use your full balance for expenses like tuition and fees, room and board, and books and supplies at any eligible public or private college, university, or trade or vocational school anywhere in the U.S. A 529 plan can also be used tax-free to cover certain tuition expenses atK-12 public, private, and religious schools.
