SIE practice questioneasy529 Plans
Which of the following statements about 529 college savings plans is TRUE?
- AThey guarantee the beneficiary’s education expenses will be covered.
- BThey are only available to institutional investors.
- CThey offer tax-deferred growth and tax-free withdrawals for qualified education expenses.✓ Correct answer
- DInvestment choices cannot be changed once established.
Explanation
Why C — They offer tax-deferred growth and tax-free withdrawals for qualified education expenses.
529 plans provide tax-deferred growth and tax-free withdrawals for qualified expenses. They are available to the public, do not guarantee costs, and allow for some investment changes.
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