PC-ES 529 College Savings Plans PC1349-Digital

EDUCATION PLANNING

529 COLLEGE SAVINGS PLANS

What You Need To Know About 529 Plans

A 529 Plan is an education savings plan operated by a state that allows you to create an investment account that is earmarked for post-secondary education expenses for the person for whom the account is established.

FIVE KEY BENEFITS OF 529 PLAN

1. TAX BENEFITS

   If the proceeds are used solely for qualified educational expenses (e.g., tuition, room, board, fees, books, or

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EDUCATION PLANNING

529 COLLEGE SAVINGS PLANS

supplies), contributions grow federal tax-free and will not be taxed when the money is withdrawn.

ALTHOUGH EACH STATE MAY HAVE THEIR OWN VARIATION OF THE SAME PLAN, ALL 529 PLANS SHARE BASIC GUIDELINES.

  Many states also offer tax breaks for 529 plan contributions in the form of income tax deductions to residents.

   Contributions to the plan do not have to be reported on federal tax returns, simplifying your tax reporting, and deposits up to $15,000 per beneficiary per year will qualify for the annual gift tax exclusion.    Account owners can even combine five years worth of annual gift tax exclusions and could thus contribute $75,000 per donor for any beneficiary in year one. * This allows the donor to remove more assets, and therefore growth, out of their estate, and begin growing them tax-deferred or tax-free sooner for the beneficiary.

2. CONTROL

   The named beneficiary has no legal rights on the funds,

* A gift tax return may be required. Consult your tax advisor.

EDUCATION PLANNING

529 COLLEGE SAVINGS PLANS

so you can ensure the money will be used for education.    The account owner can withdraw funds at any time for any reason (though the earnings portion of the nonqualified withdrawals will incur income tax and a 10% penalty tax), even choosing to take back the account for whatever reason.    The account owner can change the beneficiary to a member of the original beneficiary’s family, should the original beneficiary decide not to attend school or have excess funds in their account. **   Investment management is handled by a third-party manager selected and monitored by the state treasurer’s office. 4. FLEXIBILITY  You can change the investment options twice per year.   You can roll over funds into another 529 account once per year.   The account owner can open an account in any state 3. EASE OF MANAGEMENT

** Gifting rules may apply if the new beneficiary is in a younger generation. Consult your tax advisor.

EDUCATION PLANNING

529 COLLEGE SAVINGS PLANS

regardless of where the beneficiary lives or will attend school.

5. ELIGIBILITY

  529 plans – unlike many other retirement or education savings accounts – have no income limits, age limits, or annual contribution limits. However, there is a lifetime contribution limit that varies by state.

Contact a Commerce Trust advisor for more information about 529 College Savings Plans and other education savings and gifting options. 1-855-295-7821 | commercetrustcompany.com

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NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE

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