529 Plans

529 prepaid college tuition plans offer an easy way to save for an education. Section 529 of the tax code established two types of higher education investment plans that receive preferential tax treatment. The 529 college savings plan allows assets in the account to grow and withdrawals for college expenses to be made tax free. The second type, 529 prepaid tuition plans, also known as prepaid educational arrangements or PEAs, provides tax-deferred growth on savings for tuition, based on the current cost of that tuition.

529s have become one of the most popular college savings options. Here are some basics.