529 College Savings Plan
Federal tax benefits and minimal impact on financial aid.
Invest in a 529 college savings plan to provide for education costs and limit your tax exposure, with a minimal impact to potential financial aid.
|Yearly Contribution Limit||
|Federal Tax on Withdrawals||
None for qualified educational expenses
|Penalties for Non-Qualified Withdrawals||
10% additional federal tax on taxable distributions
|Deadline for Tax Year Contributions||
December 31 of that year
K-12 (tuition), and college
- Unlike Coverdell Education Savings Accounts and Roth IRAs, 529 plans have no income limits, age limits or annual contribution limits.
- No federal tax on earnings (state tax laws vary) when used for qualified education expenses.
- Beneficiaries are eligible for the HOPE Scholarship, and Lifetime Learning Credit in the same year.
- Custodian remains the account owner, in charge of withdrawals, and can change beneficiaries.
- Make tax-free withdrawals for up to $10,000 in tuition expenses for K-12 schools.
- In 2018, deposits up to $15,000 per individual per year ($30,000 for married couples filing jointly) will qualify for the annual gift tax exclusion.
- You can contribute to both a 529 plan and an ESA for the same beneficiary.
Choose from Ready-made Portfolios of Securities
Understand how your investments can help you reach your goals. Work with Key Investment Services to build a plan that fits your timeline and your risk strategy.
KIS does not give tax or legal advice. The comments regarding tax treatment in this material simply reflects our understanding of current interpretations of tax laws as they apply to the products covered in this material. Since tax laws are always subject to interpretation and possible changes, we recommend that you seek the counsel of an attorney, accountant or other qualified tax advisor regarding these matters as they apply to your particular situation.
Please read the Plan Disclosure Document and consider the investment objectives, risks and charges, tax treatment and expenses associated with municipal fund securities before investing. More information about municipal fund securities is available in the issuer’s official statement. The official statement should be read carefully before investing.
Most 529 Plans will accept both “in-state” and “out-of-state” applicants. Each state’s 529 Plan must be evaluated based upon its own merits relative to your needs, and the tax effects on the contributor and the beneficiary. Plan holdings could reduce the beneficiary’s ability to qualify for grants and student loans.
Withdrawals for something other than qualified higher educational expenses may be subject to federal and state income taxes and a 10% IRS penalty on earnings. You should consider many factors before deciding which 529 Plan is most appropriate. Some of these factors include: the Plan’s investment options and the historical performance of these options, the Plan’s flexibility and features, the reputation and expertise of the Plan’s investment manager, Plan contribution limits, and the federal and state tax benefits associated with an investment in the Plan. You should discuss the tax implications of 529 Plans with your legal and/or tax advisors, as features may vary significantly from state to state. While federal tax treatment of 529 Plans is identical regardless of the state Plan, state tax treatment varies. State tax treatment may vary for “in-state” and “out-of-state” residents. Generally, state tax laws affect the contributor by way of deductibility of money going into the account, and the beneficiary and/or contributor by way of the possible taxation of distributions coming out of the account.
Insurance products are offered through KeyCorp Insurance Agency USA, Inc. (KIA). KIS and KIA are affiliated with KeyBank National Association (KeyBank).
Check the background of this firm on FINRA's BrokerCheck.
Investment and insurance products made available through KIS and KIA are:
KIS, KIA and KeyBank are separate entities, and when you buy or sell securities and insurance products you are doing business with KIS and/or KIA, and not KeyBank.