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529 plans can pay for computers in 2009-2010

9-14-09 --Many grandparents contribute to 529 plans (tax-free college savings and prepaid tuition plans) as a way of reducing their taxable estate as well as assisting the child with educational expenses. For 2009-2010, funds from these plans will be permitted to pay for computer equipment and software so long as these items are used by a student at a qualified institution and used for educational purposes only. (Sorry, no Guitar Hero!) This change has come about due to the recent economic stimulus bill (American Recovery and Reinvestment Act) enacted in 2009. Details of allowable expenses for 529 plans can be found on the IRA website here.

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