Funding Of Education
And just like 529 college savings plans, prepaid tuition plans have very high contribution limits. These limits are determined at the state level, and are generally based on the student’s expected future college costs. Contributions are also considered gifts for tax purposes, so deposits up to $15,000 per year per individual will qualify for the annual exclusion . What’s more, if you elect to treat your gift as if it were made over a five-year period, as much as $75,000 will qualify. Participants purchase tuition credits or certificates that entitle the account’s beneficiary to a waiver of tuition costs at qualifying colleges when the student (i.e., the beneficiary ) enrolls in school at some future date. Although the price paid today is not necessarily equivalent to current tuition costs, prepaid plans use current tuition levels to establish their pricing. 529 college savings plans can be withdrawn tax-free to pay for qualified higher education expenses, which include tuition, fees