Following a wave of public support, Congress created the framework for 529 college savings plans in 1996 with the passage of Section 529 of the Internal Revenue Code. The plans, which are a great way to begin preparing for a child’s future college expenses, are sponsored by individual states and offer investments managed by professional money managers such as OppenheimerFunds.
Open an account and pick a beneficiary (the future college student) and you’ve taken an important first step toward making college more affordable for your family.
Money saved in a 529 plan is invested according to the account holder’s preferences and risk tolerance and has the opportunity to grow tax-free.
Withdrawals are also tax-free as long as they are used for qualified higher education expenses and can be used at accredited colleges and schools nationwide – and even at many colleges outside the U.S.* The account holder decides when to make a withdrawal and has the flexibility of changing beneficiaries (to another qualified person) at any time.
Once you open an account, grandparents, relatives and friends can support your college savings efforts by giving the gift of education, particularly on special occasions such as birthdays, religious ceremonies and holidays. The cumulative effect of $25, $50 and $100 gifts building up over time can be significant.
Learn more about college savings strategies and 529 plans managed by OppenheimerFunds by visiting:
* When withdrawals are used for non-qualified expenses, the earnings portion of the withdrawal will be subject to ordinary federal, any applicable state income tax and an additional 10% federal tax penalty.