Modifications to Section 529 Qualified Tuition Programs

Established through Section 529 of the Internal Revenue Code, Section 529 plans are professionally managed plans established by states to enable individuals to save for the costs of higher education. These plans allow larger amounts of funds to be set aside for education expenses than many other tax-advantaged education savings vehicles, are usually not subject to AGI contribution limits, and may be opened for any person at any age.

After 2001, distributions from Section 529 Qualified Tuition Programs will be free of federal income tax. (Please note that distributions from the plans of eligible educational institutions are not tax-free until after 2003.)

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