SIE practice questioneasy529 Plans — Overview
A Section 529 plan is a tax-advantaged savings plan designed to:
- ACover medical expenses for disabled individuals
- BProvide life insurance benefits
- CFund retirement expenses
- DPay for qualified education expenses such as tuition, room and board, and books✓ Correct answer
Explanation
Why D — Pay for qualified education expenses such as tuition, room and board, and books
529 plans are state-sponsored, tax-advantaged investment vehicles designed for education savings. Earnings grow tax-free and withdrawals are tax-free when used for qualified education expenses (tuition, fees, room/board, books, computers, and up to $10,000/year for K-12 tuition). Non-qualified withdrawals are subject to income tax and a 10% penalty on earnings.
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