What are some of the Section 529 Plan benefits available under the current 2011 tax law?
Currently, one of the most popular tax incentive college funding method is a Section 529 plan (qualified tuition program) as it is available to all taxpayers, regardless of their income. The following are some of the plans benefits as follows;
1. "Distributions are tax-free if used to pay qualified education expenses at any accredited college, university, or graduate school and most community colleges and certified technical training schools in the United States."
2. "Distributions can be used to pay for a computer, computer software and even internet expenses, so long as the computer is used for college work."
3. Control of the funds remains in the hands of the account owner (not the beneficiary), even after the beneficiary reaches legal age, permitting you to change beneficiaries at any time and for any reason.
Thus, "the plan offers the account owner the flexibility change the beneficiary to another child if the original beneficiary does not go to college, or excess funds remain in one child’s account after college. You may also need to change the beneficiary to yourself if a financial emergency requires you to have access to the funds. But it is worth remembering that the distributions may be taxable if not used for qualified education purposes."
4. Age and income restrictions do not apply to the account owner or beneficiary, unlike other tax incentive education plans.