1 Withdrawals from a 529 plan are tax-free when used for qualified higher education expenses, which include tuition, mandatory fees, books, supplies, and for certain computer technology and equipment, room, board and off-campus housing expenses (as long as the cost does not exceed the cost of on-campus housing). Non-qualified withdrawals are subject to a 10% federal penalty as well as federal, state and local income tax.
2 Contributions can be made until account value of all CollegeAdvantage accounts for the beneficiary reaches $426,000, however the assets in the account are free to grow without limit.
3 Inclusive of all gifts to the beneficiary, not just contributions to a 529 plan. Funding a 529 account is considered under applicable tax law to be a gift to the designated beneficiary. 529 gifting allows someone to make a five-year accelerated gift of $70,000 per beneficiary, provided you do not make another gift to that student for the next five years. When taking advantage of the five-year acceleration for gift tax exemption purposes, it is important to note that if a contributor passes away within the five year period, a prorated portion of their gift is put back into their taxable estate. Please speak with your financial professional for more information regarding changing beneficiaries as there may be tax consequences relating to gifting or generation-skipping depending on the new beneficiary.
4 Expenses for room and board and computer equipment and technology are subject to certain eligibility requirements.