529 Plan
The federal government created the 529 Plan to give families and others a
tax advantage when saving for college tuition costs. These state-sponsored savings plans can be established by anyone—not just parents or grandparents—who wants to contribute to a beneficiary's future higher education costs. You can even open an account for yourself.
529 Plan Features
- Investments made as after-tax contributions
- Tax-deferred growth potential*
- Tax-free withdrawals on qualified expenses*
- Funds can be used at any post-secondary school in the U.S., including trade schools and community colleges
Eligibility Requirements
- Account owner may be an adult or a minor (minors must have a parent or guardian sign the application form)
Tax-Free Withdrawals
- Withdrawals from the account to pay for qualified expenses, such as tuition, fees, textbooks, supplies, equipment and qualified room and board, at an eligible educational institution are federally tax-free. For non-qualified withdrawals, the earnings will be taxed as ordinary income, and a 10% federal tax penalty may apply.
Contribution Limits 2009
- Maximum contribution of $65,000 ($130,000 for married couples) with no gift tax (as long as no other gifts are given within a 5-year period)
Some states offer residents an incentive to invest in their state-sponsored 529 College Savings Plan. Be sure to ask your tax advisor how a contribution to a 529 Plan will affect your state tax bill.
We can help you establish an investment plan to help meet your financial goals, including saving for higher education. For more information, or to open a 529 Plan, contact us at 714/258-4000 Monday through Friday, from 9 a.m. to 5 p.m.
*Pursuant to the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), qualified distributions from a 529 College Savings Plan are tax-free.
For more complete information about 529 Plans, including risks, charges, and expenses, please obtain the applicable prospectuses and/or program description from your financial advisor.
*Representatives are registered, securities are sold, and investment advisory services are offered through CUNA Brokerage Services, Inc. (CBSI), member
FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (866) 512-6109. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value, and are not obligations of or guaranteed by SchoolsFirst FCU. CBSI is under contract with SchoolsFirst FCU, through the financial services program, to make securities available to Members.
CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty states of the United States of America.
