A. No. Although you don’t have much time to build up funds for a 16-year-old, a 529 plan can still provide tax-free earnings and tax-free distributions for qualified expenses. Plus, you can claim an income tax deduction in many states, including Illinois, for 529 contributions. (RR, 7/24/06) And, if you don’t use all of the funds in your older child’s account, you can transfer them tax-free to your younger child’s account. Tip: The Pension Protection Act has made permanent tax breaks for Section 529 plans that were scheduled to expire after 2010.
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