Holiday gifting doesn't have to hurt your wallet. In this Women Talk Money: Playback, Alex Roca recaps gifts that grow, like savings bonds or contributions to a 529 account, HSA, or IRA. Plus, learn ways to give back to good causes that might also do some good for your tax bill. Watch now. #Gifts #Growth #Invest Fidelity.com/Gifting 1229589.1.0 ...

Core Insights - The primary objective of 529 plans is to facilitate college savings through tax-advantaged investment accounts that allow tax-free growth for qualified educational expenses [1][2] Group 1: 529 Plan Overview - 529 plans are designed to help families save for future education costs, with contributions made using after-tax dollars [3] - The funds in a 529 account grow tax-deferred, and withdrawals for qualified education expenses are tax-free [3] - Qualified expenses include tuition, fees, textbooks, supplies, computers, and in some cases, room and board [3] Group 2: Contribution Rules and Penalties - There are strict rules regarding contributions, and overcontributions can lead to penalties if not used for qualified expenses [4] - If funds are withdrawn for non-educational costs, the earnings portion is subject to ordinary income tax plus a 10% penalty [4] - Exceptions to the penalty include scenarios such as receiving a scholarship or the child becoming disabled, but these do not apply in Becky's case [4] Group 3: Specific Case Analysis - In the case of Becky, she accidentally contributed $10,000 instead of $1,000, leading to potential penalties for the overage if withdrawn [2][5] - If Becky withdraws the excess funds without using them for education, the earnings portion would incur a 10% penalty, although the penalty may be small due to the short duration the funds remain in the account [5] - Technically, Becky cannot withdraw just the $9,000 overage without facing penalties [5]