A 529 plan is a tax-advantaged investment account explicitly started to pay for education expenses. An adult can create a 529 plan for a child and invest like a custodial account. The parent can use the money to pay for tuition, student housing, books, and more (the list of acceptable uses has been changing a bit recently.)
In general, a 529 account has a specific and limited number of investment options, usually only a few mutual funds. The tax benefits of a 529 plan change depending on what state you live in. Account-holders of 529s may be charged penalties by the IRS if the money is used to pay for anything outside of educational expenses. So make sure it's the proper investment account for your plans.
Onu does not provide tax advice. Please consult with a tax professional regarding your personal circumstances.
While the money in many custodial accounts can be used for any expense, the money in a 529 plan is only for education (and therefore has tax benefits built-in). Ask your financial advisor the best way to plan for these specific costs and how you might split up your money amongst your child's investment accounts.
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