Which of the following statements is true regarding 529 savings plans?

A key feature of 529 savings plans is their flexibility. The account owner maintains control and can change the designated beneficiary to another qualified family member of the original beneficiary without incurring federal income tax or penalties. This allows the funds to be used for another child, a grandchild, or even the account owner themselves if they decide to pursue further education. This tax-free transfer, often called a rollover, ensures the educational savings can be repurposed within the family as needs change.

A. State tax deductions for 529 contributions are not universal; they vary significantly by state, and some states offer no deduction at all.

B. There are no federal income limitations for individuals contributing to a 529 savings plan, unlike other tax-advantaged accounts like Roth IRAs.

C. The account owner, not the beneficiary, maintains legal control over the assets, including investment decisions and withdrawal authorizations.

1. Internal Revenue Service (IRS). (2023). Publication 970

Tax Benefits for Education. Chapter 6

Qualified Tuition Program (QTP). Under the section "Rollovers and Other Transfers

" it states

"Any change in the designated beneficiary of an interest in a QTP isn't a taxable distribution if the new beneficiary is a member of the family of the old beneficiary."

2. FINRA (Financial Industry Regulatory Authority). (2021

June 28). Introduction to 529 Plans. Under the "Key Features" section

it clarifies

"You

the account owner

stay in control of the account... You can also change the beneficiary of your 529 account to another 'member of the family' of the original beneficiary."

3. U.S. Securities and Exchange Commission (SEC). (2021

May 10). Investor Bulletin: An Introduction to 529 Plans. In the "Who controls the account?" section

it states

"The account owner—not the beneficiary—controls the account and makes all the decisions."