Type the correct answer in the box. Spell all words correctly. Which plan offers a tax-free education?
APlan is a plan that offers a tax-free education, even upon withdrawal. However, the use of the money is
limited and can only be used for education expenses.

529

Explanation:

A 529 plan is a plan to encourage savings for future education expenses.  The money saved in a 529 plan is not subject to taxation as long as it will be used for education purposes.

Parents, grandparents, or guardians can open 529 savings account for a child, who will be named as the beneficiary.  The contributor of funds to the account may be eligible for a state tax deduction for contributing to a 529 plan. The gains on the accounts are exempt from tax if they are to be used on education expenses.

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