Tax Benefits of College Savings Plans

529 Savings Plans offer generous tax benefits. Not only do your savings accumulate tax-deferred, withdrawals used for educational purposes are tax-free.

529 programs also offer Estate Tax and Gift Tax benefits.

• Estate Tax Benefits: 529 Savings Plans allow 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.

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.
• 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.

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*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