Education Planning Common Questions

My child is the beneficiary of a 529 plan. Can he use the 529 funds for graduate school?

Answer:

It depends on which type of 529 plan – a college savings plan or a prepaid tuition plan. Most college savings plans use the federal definition of "qualified education expenses" and allow funds to be used for graduate school. But most prepaid tuition plans allow funds to be used only for undergraduate costs. Check the rules of any 529 plan you're considering to be sure.

And watch out for contribution limits if your child will be using 529 funds for both undergraduate and graduate school. All college savings plans limit the amount that can be contributed to a 529 account, so you may want to choose a plan whose contribution limit is high enough to cover the cost of six or more years of education.

GE 52269 (12/09)

Please be advised that this material is not intended as legal or tax advice. Accordingly, any tax information provided in this material is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent advisor.

If you are investing in a 529 plan outside of your state of residence, you may lose available state tax benefits. Make sure you understand your state tax laws to get the most from your plan.

529 plans are subject to enrollment, maintenance, administration/management fees and expenses. 529 plans are subject to fluctuation in value and market rise, including loss of principal.

Investors should consider the investment objectives, risks, charges, and expenses of 529 plans carefully before purchasing. More information about 529 plans can be found in the issuer's official statement. Please read the official statement carefully before investing.

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