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Federal 529 Plan Tax Benefits

• Earnings grow tax-free.
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• Distributions to pay qualified education expenses are tax-free.
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• Anyone can participate and there are no income limitations.
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• Participants also benefit through tax-free gifting. Account owners can make annual gifts of up to $13,000 single and $26,000 joint to a designated beneficiary for all accounts without incurring federal gift tax. For contributions over the limit, you may treat the money (up to $65,000 single and $130,000 joint) as having been made ratably over a five-year period.
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• At any time you may prepay as much college and graduate school as you'd like up to $350,000 - the current maximum contribution limit.
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• Assets in a 529 account are not treated as part of the federal taxable estate of the account owner who is not a designated beneficiary.
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• U.S. Savings Bond owners generally may redeem bonds purchased after 1989 tax-free and deposit the proceeds in a 529 plan. IRS restrictions apply. Please see the IRS Tax Benefits for Education for current income limitations or call 800-888-2723 for more information.
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• If the child does not go to college you can change the beneficiary penalty free. To avoid taxes and penalties, your new beneficiary must be a member of the family of your original beneficiary. Certain restrictions apply. Please consult your tax advisor and the Plan Disclosure for more detailed information regarding a change in beneficiary.

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