529 Savings Plans Contributions

Which of the following statements about 529 savings plans is TRUE?

Contributions to a 529 plan are deductible on your federal income tax return.
There are income limits for contributors to 529 plans.
Qualified withdrawals from a 529 plan are tax-free at the federal level.
Account owners lose control of the funds once the beneficiary turns 18.

Correct answer is C.

529 savings plans are tax-advantaged education savings accounts for which qualified distributions are federally tax-free. Some states also offer state income tax deductions or credits for contributions, but there is no federal deduction. There are no income limits on who can contribute. The account owner retains control of the account regardless of the beneficiary’s age.

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