Question

1. what is the key feature of a 529 plan that makes it attractive for saving for education?

a. guaranteed interest rates
b. immediate access to funds
c. no contribution limits
d. tax - free withdrawals for qualified education expenses

Explanation:

A 529 plan is a tax - advantaged savings plan designed to encourage saving for future education costs. The key feature that makes it attractive for saving for education is the tax - free withdrawals for qualified education expenses. This means that when the money is used for eligible educational purposes (such as tuition, fees, books, etc.), the earnings on the contributions are not taxed.

• Option a: Guaranteed interest rates are not a key feature of 529 plans. 529 plans can have investment - based returns which are not guaranteed.
• Option b: While there is access to funds, it is not the most distinguishing feature compared to the tax - free aspect.
• Option c: There are contribution limits (although they are relatively high in many cases) for 529 plans.

Answer:

d. Tax - free withdrawals for qualified education expenses