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Tax Benefits 529 Savings Plans offer generous tax benefits. Not only
do your savings accumulate tax-deferred, withdrawals used
for qualified educational purposes are tax-free.
529 programs also offer Estate Tax and Gift Tax benefits
- Estate Tax Benefits: A 529 Savings Plan
allows you to reduce the value of your estate while maintaining
control of your investments.
- Gift Tax Benefits: You may contribute
annually up to $11,000 per student (or annually up to $22,000
per student if you and your spouse contribute) without
being subject to gift tax. There is an accelerated gift
option which allows the donor to average contributions
over $11,000 per beneficiary over a five year period for
gift tax purposes. therefore the donor can contribute as
much as $55,000 for one beneficiary in a single year without
creating a taxable gift if no other annual exclusion gifts
are made to that beneficiary during the five year period.
What’s more, beginning in 2002, these tax benefits
are coordinated with other education tax benefits.
- HOPE Scholarship Tax Credit Provides
up to a $1,500 maximum tax credit per year per dependent
student for up to 2 years.
- Lifetime Learning Tax Credit Provides
up to a $1,000 tax credit per family for postsecondary
education courses.
- Tuition and Fees Deduction New for
2002, this allows taxpayers to deduct up to $3,000 of tuition
and related expenses—even if they don’t itemize.
*Distributions from qualified tuition
plans will be tax-free when used for qualified post-secondary
education expenses beginning in 2002 for state sponsored
plans and 2004 for privately sponsored plans. Without further
legislative action, the tax-free status is set to expire
for tax years beginning after 2010.
Disclaimer: Information provided by
Laine Schoneberger; a registered representative offering
securities and investment advisory services through MML
Investors Services, Inc, member SIPC. 4350 East Camelback
Road Bldg F150 Scottsdale AZ 85018 (602) 912-0213. Campbell,
Schoneberger & Associates, Ltd. is not a subsidiary
or affiliate of MML Investors Servces, Inc. #051046
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