Glossary of Municipal Securities Terms


A program established by a state as a “qualified tuition program” pursuant to Section 529 of the Internal Revenue Code. Under a 529 savings plan, a person may make contributions to an account established for the purpose of meeting the qualified higher education expenses of the designated beneficiary of the account. Effective January 1, 2018, qualified higher education expenses include expenses for tuition at an elementary or secondary public, private, or religious school. Contributions generally are used to acquire units in a state trust, with trust assets invested in a manner consistent with the trust’s stated investment objectives. Units typically constitute municipal fund securities. Under current federal tax law, earnings from a 529 savings plan used for qualified higher education expenses of the designated beneficiary are excluded from gross income for federal income tax purposes. See: DESIGNATED BENEFICIARY; 529 PLAN; MUNICIPAL FUND SECURITY; QUALIFIED HIGHER EDUCATION EXPENSES. Compare: PRE-PAID TUITION PLAN.

Last updated: February 23, 2018

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