Qualified Tuition Programs (Section 529s)

Public or private schools may establish tax-exempt prepaid tuition programs, also referred to as Section 529 Plans. Section 529 plans are accounts that may be established by anyone—parents, other relatives, or friends of the family. The investment grows tax-free and distributions are tax-free when used to pay for tuition and other education expenses at any accredited college or university.
 
This is a smart idea for grandparents, who can contribute up to $12,000 per year ($24,000 for couples) without triggering the federal gift tax. You can even make a one-time contribution of as much as $60,000 ($120,000 from a couple) and spread the gift tax exclusion over the next five years. Not a bad way for grandparents ...

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