What is a “529” Plan?

“529” refers to Section 529 of the Internal Revenue Service code authorizing “qualified tuition programs” with special tax advantages to help individuals save for college. Federal law allows states to develop these college savings programs.

What is North Carolina’s 529 Plan?

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Officially known as the North Carolina College Savings and Investment Program and referred to as North Carolina’s National College Savings Program, the program is generally marketed under the shorter name, “NC 529 Plan”. The NC 529 Plan is open to residents of any state and funds can be used at any eligible college or university, anywhere in the country.

Account earnings in the NC 529 Plan are free from federal and, for NC taxpayers, state income taxes when used to pay for qualified higher education expenses.

Qualified education expenses include:

1) Expenses related to attendance at a college or university, including

  • Tuition
  • Fees
  • Room and board
  • Books
  • Computer and associated equipment
  • School-required supplies and other equipment

2) K-12 Tuition

Who Can Open an Account?

Anyone over the age of 18 with a valid social security number or other taxpayer identification number can open an NC 529 account. The named beneficiary can be anyone—family, friend, even the account holder—of any age for whom the account owner plans to save for college. You can open a fund for a newborn or even a college-aged or adult student. You do not even need to be a resident of North Carolina.

Investment Options

You choose one or more Investment Options. The NC 529 Plan offers low-cost age-based and individual options that cover a range of financial strategies, from conservative to aggressive—whatever approach suits your investment style, time until college, and risk tolerance.

You decide how much and when you want to invest. You can contribute occasionally or regularly, using check, electronic funds transfer, automatic draft, rollover, transfer or, if your employer offers, payroll deduction. The contribution minimum is only $25.

The IRS allows you to reallocate current assets you have invested twice per calendar year. You can change how you want your future contributions allocated at any time.