A 529 plan is a tax‑favored savings program offered by states and some educational institutions to encourage families to save for future education costs. You put money into the account after taxes; the funds grow tax‑free, and withdrawals used for qualified education expenses (such as tuition, fees, books and room and board for college) are not subject to federal tax. Many states offer state tax benefits for contributions, though California does not. Recent federal law allows up to $10,000 per year to be used for K‑12 tuition, but California does not conform to that rule; using 529 funds for private elementary or high school expenses may trigger state tax on earnings and a penalty. Some plans also allow up to $10,000 to repay student loans or to fund apprenticeship programs. There is no annual contribution limit, but large contributions may be subject to gift tax rules.
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