What are 529 Plans?
A 529 plan is a plan operated by a state or educational institution, with tax advantages and potentially other incentives to make it easier to save for college and other post-secondary training for a designated beneficiary, such as your child or grandchild.
The primary benefit of 529 plans is that the earnings are not subject to federal tax, and generally not subject to state tax when used for the qualified education expenses of the designated beneficiary, such as tuition, fees, books, as well as room and board.
Note. Contributions to a 529 plan are not deductible on your federal return. However, some states allow full or partial deductions for 529 plan contributions. If your state is one of those states, TurboTax will prompt you to enter your contributions during the step-by-step state interview.