What are Section 529 college savings plans? Should assets from these plans be reported on the Noncustodial PROFILE Application?
The term “Section 529 Plan” is another phrase for Qualified Tuition Plans (QTP). These are savings plans that allow parents, other relatives, and even non-relatives to save funds each year for college expenses for a designated beneficiary (the student who will eventually attend college). QTP’s fall into one of two categories: College Savings Plans or Prepaid Tuition Plans. All 50 states sponsor at least one type of QTP. College Savings Plans are fairly simple, although investment options will vary from state to state. The owner of the plan deposits funds into the account and when the beneficiary enrolls in college, those accumulated funds (principal plus interest) may be withdrawn to help pay for each year of the beneficiary’s college expenses. Earnings on the investment are tax-free to the plan’s owner, but when funds are withdrawn, earnings on that amount are taxable to the beneficiary. Since these plans represent an asset–a savings account of a sort–they must be reported on the No
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