Can you save for college with a 529 plan?

In addition to a 529 plan or savings account, you could also save for college using a Coverdell Education Savings Account (ESA). With this type of account, you can contribute up to $2,000 per year, per beneficiary until they reach age 18. Withdrawals for qualified education expenses are tax-free, but there’s a catch.

What are the benefits of a 529 college savings account?

A 529 college savings account can offer some advantages that you might miss out on with a regular savings account. The main benefits of a 529 plan over a savings account include: When you add money to a 529 savings plan, you can invest it in mutual funds, exchange-traded funds ( ETFs) or target-date funds.

Are 529 plans tax-advantaged?

When it comes to saving for college and other education expenses, the 529 plan comes close to being the perfect tax-advantaged savings vehicle. 529 plans have pros and cons, but they offer significant advantages, especially concerning your tax return.