529 Plan
A state-sponsored, tax-advantaged investment account for education expenses.
Contributions grow tax-free, and withdrawals are federal-tax-free when used for qualified education expenses: tuition, room and board, books, and up to $10,000 per year of K-12 tuition. Most states offer a state income tax deduction or credit for contributions to their own plan. Each state runs its own 529 (Utah’s my529, New York’s 529, and California’s ScholarShare are popular). Under SECURE 2.0, up to $35,000 of leftover 529 funds can be rolled into a Roth IRA for the beneficiary (subject to conditions). Non-qualified withdrawals owe income tax plus a 10% penalty on earnings.
A 60-second lesson that puts this term in context, alongside the others, lives inside the Finlo app.