What's a 529 Plan?
A 529 Savings Plan is a dedicated education savings account. A vehicle designed to save
specifically for higher education. These accounts allow for State tax deductions in Wisconsin and the tax subtraction from income is up to $3,380 per year, per account for married individuals filing jointly, or $1,640 for those filing individually. Plus, they allow for tax-deferred growth on earnings on any Federal tax-free distributions for qualified higher education expenses (QHEE), like tuition, room and board, books, supplies. And Recent tax changes have expanded the use of 529 funds to include KK-12 tuition, apprenticeships, and a one-time use to pay up to $10k towards student loan debt.
Saving for college should be one of parents highest saving priority. College Savings, retirement, and having an emergency savings account are the top savings goals parents should set for their families. Having savings in each savings bucket can protect your overall savings and assure greater financial security!
529 college savings plans are a great way to save for college. They offer tax-advantaged contributions and earnings on qualified expenses, plus investment options to encourage saving for future education expenses of a designated beneficiary (commonly one's child, grandchild, niece, nephew, or other loved ones). States offer and administer these plans, named after Section 529 of the Internal Revenue Code. Wisconsin's two plans, Edvest and Tomorrow's Scholar, are managed under contract by TIAA-CREF Tuition Financing, Inc. and Voya Investment Management.
All withdrawals from 529 plans for qualified education expenses remain free from federal income tax. Wisconsin (and most states) mirror the federal rules for state tax purposes. Qualified expenses for higher education include tuition, books, software, computers and related technology, room and board, and some other fees. Elementary and secondary school tuition only, up to $10,000 per beneficiary each year was added as allowed expenses in 2018. Some states allow additional tax benefits for certain new contributions, usually for that state's plan(s). And now the costs to attain an apprenticeship are qualified expenses under 529 plans, along with a one-time use of up to $10,000 to pay student loan debt.
Check with your home state's 529 plans, which may affect residents' tax benefits, scholarships, or creditor protection. A list of other 529 plans is at www.collegesavings.org.
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