An education savings plan allows savers to open an investment account for a beneficiary’s future educational expenses. Account owners can use withdrawals from this plan to pay for college tuition, fees, and room and board. They can also use it for elementary and high school education, usually up to $10,000.
As long as withdrawals are used to pay for qualified educational expenses, account holders do not pay taxes on the interest their money accrued during the time it was invested. This type of 529 college savings plan does not typically maintain a residency requirement.