Can a college savings plan offer a prepaid tuition plan?

Educational institutions can offer a prepaid tuition plan but not a college savings plan. The first education savings plan was a prepaid tuition plan: the Michigan Education Trust (MET) was created in 1986. More than a decade later, Section 529 was added to the Internal Revenue Code, authorizing tax-free status for qualified tuition programs.

What is a 529 education savings account (ESA)?

Ideal as a supplement to a 529 plan, an education savings account (ESA) helps you pay for education expenses from kindergarten through college, and withdrawals are tax-free when used for eligible expenses. What are the fees and commissions? $0 account open or maintenance fees.

How does a college savings plan work?

College savings plan. This plan works similarly to a Roth IRA or Roth 401 (k) that you use to save for retirement. You invest after-tax dollars into a variety of options, such as mutual funds and exchange-traded funds. The value of your investment will increase or decrease based on the performance of your investments.