COLLEGE REFUNDS: Plan distributions used to pay for qualified expenses and then refunded may be returned, without penalty, to the same or another 529 account for the same beneficiary. Only school-issued refunds are allowed, and any returns must be completed within 60 days.

UPDATE: IRS Notice 2020-23 released April 10 extends the 60 day period for recontributions of current refunds to July 15, 2020, due the COVID-19 pandemic. For refunds after May 15, the 60 day period applies.

2021 tax information for Wisconsin account owners

• In 2021, contributions made by any Wisconsin adult reduce their state-taxable income, dollar-for-dollar, up to $3,380 per beneficiary per year. The contribution may be made to an existing account you own, another Wisconsin account, or to a new one.
• Contributions in excess of $3,380 may be carried-forward to be applied in subsequent tax years.
• This number is subject to an inflation adjustment and rounding each year. The subtraction for married filing separately or divorced parents is half the amount, or $1,690.
• Incoming rollovers from other states' 529 plans are accepted. The portion that is principal or contributions may qualify for reducing your Wisconsin taxable income, including carry-forward for subsequent years; the portion attributed to growth is not eligible. Amounts that received an earlier Wisconsin reduction are not eligible.
• A rule affects contribution tax treatment when a withdrawal is made within a 365-day period. Two examples: One, Pat opens an account with $2,000 in December 2020 and subtracts on the 2019 tax return. In August 2020, $1,000 is withdrawn for qualified college expenses. Since the $1,000 had not been in the account for 365 days, $1,000 is then added back as taxable income on the 2020 tax return. Two same situation as above, but the account was open with a $1,000 balance in 2019, before the 2020 addition of $2,000. In this case, the withdrawal would be considered as taken from the older money outside of the 365-day window, and is not reported as income on 2020 taxes. This method is often called 'first-in, first-out.'
• Contributions and distributions (for qualified expenses and nonqualified uses) are reported on state Schedule CS, and attached to Form 1, the state income tax return. The schedule and instructions are at the Department of Revenue website or here and here.
• Wisconsin's Maximum 529 Account Balance is $516,000 as the sum of all Wisconsin plan accounts for the same beneficiary (i.e. Edvest plus Tomorrow's Scholar plus Tuition Units). This amount became effective in December, 2020. 

Does your family have college savings needs? 

Edvest and Tomorrow's Scholar can help

Higher education is crucial to helping children achieve their dreams, and planning ahead for those expenses can really help.  Edvest and Tomorrow's Scholar, the two savings plans in Wisconsin's 529 College Savings Program, offer an easy and flexible way for families to prepare for these costs.

 

The program offers valuable benefits

 

An array of low-cost investment options  Choose from portfolios that range from conservative to more aggressive allocations to align with your time frame and investment philosophy.  Both passive (indexed) and actively-managed portfolios are available, along with stable value choices.  Institutional class investment fees make college savings more affordable.

 

Flexible contribution amounts  Open an account for as little as $25 per month.  You control the amounts and frequency of automatic deductions or lump-sum payments.  Also enjoy maximum account limits of $516,000 per beneficiary.

  

Most college costs at thousands of schools are eligible  Qualified expenses include tuition, fees, books, room and board, computers, related software or internet services, or required expenses at most institutions nationwide--including technical schools, public and private colleges, universities, graduate schools, and also at many locations outside of the U.S. 

 

No age, income, or time limits  Any adult can contribute to an account--there are no income level restrictions, or age limitations for owners or beneficiaries.  Accounts may also be used for graduate school, continuing education, or classes later in life.

 

Federal and state tax advantages  Earnings in your account grow both federal and state tax-free when used for qualified higher education expenses.

 

Annual state tax benefit  Any person may subtract contributions up to $3,380 per beneficiary from their Wisconsin taxable income for the 2021 tax year, up until April 15, 2022. Amounts in excess may be carried forward for use in future tax years.  Contributions to accounts with yourself as named beneficiary are also eligible for this benefit.

To view contribution, rollover and distribution FAQs for College Savings Accounts at the Wisconsin Department of Revenue website, click here.

 

More information about the Edvest direct-sold plan is available online or by calling 1-888-338-3789.  The Tomorrow's Scholar plan is only available through financial advisors and fee-only planners.  Both plans are qualified tuition programs under 26 USC 529, offering certain tax benefits, and are administered by the State of Wisconsin.  Residents of other states should check to see if 529 plans in their home state offer favorable state tax advantages, scholarship eligibility, or creditor protection.  The Edvest Facebook, Twitter, YouTube channel, Pinterest, and College Saving Connection blog pages are managed by the State of Wisconsin.