distribution

Using a §529 plan to pay for higher education costs can be a great tax savings tool in itself; although contributions are not tax deductible federally or for California, they are deductible in 34 other states. All withdrawals and earnings are tax-free if used to pay for qualified higher education expenses (“QHEE”) for a designated beneficiary. The plans can be transferred to any ‘qualified member’ of the beneficiary’s family (as defined by the IRS in Pub. 970), so the funds do not have to be lost if there is excess after the first beneficiary completes their higher education or decides not to use it at all.

For estate planning purposes, the §529 accounts do not count towards the owner’s gross estate for […]