which is a tax-free savings account that can only used for educational expenses?
which is a tax-free savings account that can only used for educational expenses?
Answer: The tax-free savings account that can only be used for educational expenses is called a 529 plan. This type of savings plan is named after Section 529 of the Internal Revenue Code and is designed to encourage saving for future education expenses, such as tuition, fees, housing, and textbooks.
The funds in a 529 plan grow tax-free and are not subject to federal income tax when withdrawn, as long as they are used for qualified education expenses. Each state has its own 529 plan with different features and benefits, so it’s important to research and compare options before choosing one.
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