What are the federal income tax benefits of a 529 account?

Earnings in a 529 plan grow federal income tax-deferred and withdrawals are federal income tax-free when used for qualified higher education expenses. Qualified higher education expenses include tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution, and expenses for the purchase of computer or peripheral equipment, computer software, or Internet access and related services, if such equipment, software, or services are to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible educational institution. Room and board expenses are also eligible for students enrolled at least half-time. Qualified higher education expenses also include expenses for a special needs beneficiary that are necessary in connection with their enrollment at an eligible educational institution.






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