Question: My child is the beneficiary of a 529 plan. Can he use the 529 funds for graduate school?
Answer :
It depends on which type of 529 plan--a college savings plan or a prepaid tuition plan. Most college savings plans use the federal definition of "qualified education expenses" and allow funds to be used for graduate school. But most prepaid tuition plans allow funds to be used only for undergraduate costs. Check the rules of any 529 plan you're considering to be sure.

And watch out for contribution limits if your child will be using 529 funds for both undergraduate and graduate school. All college savings plans limit the amount that can be contributed to a 529 account, so you may want to choose a plan whose contribution limit is high enough to cover the cost of six or more years of education.

Note: Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about 529 plans is available in each issuer's official statement, which should be read carefully before investing. Also, before investing, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits.