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Reading, Write-Offs and 'Rithmetic

Saving for schooling now can be tax-free.

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This story appears in the November 2001 issue of Entrepreneur. Subscribe »

Saving for college is getting more attractive from a tax standpoint, thanks to the new tax law's changes in Section 529 plans. Starting in 2002, distributions to students are exempt from federal tax as long as they're used for higher education.

Operated by states and managed by large brokerage houses, the plans came into use in 1997. Money accumulated can be used for qualified higher-education expenses such as tuition, fees, books and equipment.

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