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re: 529 Plan: Tax Implications?
Posted on 7/14/11 at 2:22 pm to LSUTexan78
Posted on 7/14/11 at 2:22 pm to LSUTexan78
I'll read more about it.
Thanks for all the help so far, though.
Thanks for all the help so far, though.
3
Posted on 7/14/11 at 2:24 pm to shutterspeed
Just realized you are in MS, so it really doesn't matter about the LA plan. Sorry.
Posted on 7/14/11 at 2:28 pm to saint308
quote:
The LA start program does allow for state deductions. I think the amount is up to $2400 per person or $4800 per couple.
I stand corrected then. That's a pretty good deal in LA even if the amount is fairly limited. Is that $4800 per child or a total of $4800 per couple?
Posted on 7/14/11 at 2:30 pm to LSUTexan78
quote:
Is that $4800 per child or a total of $4800 per couple?
Per child I believe. Also, depending on your income the state will also match your contributions to a certain %. I will post some info.
Posted on 7/14/11 at 2:32 pm to shutterspeed
quote:
anks for all the help so far, though.
No problem. 529s are also nice b/c they allow for relatively easy contributions. You can invite friends and family to make contributions instead of more meaningless toys etc. Most people have a difficult time saving for such a large expense many years away but the auto debit features can put your contribution plan on auto-pilot.
Be mindful of the investment fees. Some plans charge a fairly exorbitant rate, sometimes over 2%.
Posted on 7/14/11 at 2:33 pm to shutterspeed
quote:
Tax Benefits: Good news for Mississippi residents - by investing in your state's 529 plan, you can deduct up to $10,000 on your state income taxes for single filer and $20,000 for married filers. You also get federal income tax benefits as you do not pay income tax on your earnings. Out-of-state participants still get the federal tax benefits.
Posted on 7/14/11 at 2:36 pm to LSUTexan78
quote:
Is that $4800 per child or a total of $4800 per couple?
From the LA Start Plan disclosure booklet
up to $4,800 per Beneficiary per
year for married couples filing jointly (any unused
exclusion may be carried forward to subsequent tax
years).
Matching:
Reported Adjusted Gross=Income Earnings Enhancement Rate
$0 to $29,999= 14%
$30,000 to $44,999= 12%
$45,000 to $59,999= 9%
$60,000 to $74,999= 6%
$75,000 to $99,999= 4%
$100,000 and above= 2%
Posted on 7/14/11 at 2:41 pm to LSUAfro
I just read that.
Plus, it's actually guaranteed by the state. Seems like a good deal.
Plus, it's actually guaranteed by the state. Seems like a good deal.
Posted on 7/14/11 at 2:42 pm to LSUTexan78
quote:
Be mindful of the investment fees. Some plans charge a fairly exorbitant rate, sometimes over 2%.
Probably not much I can do about that, unfortunately.
Posted on 7/14/11 at 2:43 pm to saint308
quote:
state will also match your contributions to a certain %
How can LA afford this? I would be interested to see the annual cost to the taxpayers. Any stipulations on where the funds must be used? (ie. Louisiana universities)
Posted on 7/14/11 at 2:47 pm to LSUTexan78
No, they can be used at pretty much any university or technical school. The investments are Vanguard so it is pretty cheap too.
ETA: 53. Where can my beneficiary use START funds?The beneficiary can use START funds at any eligible educational institution. For START Saving
Program purposes, an “eligible educational institution” is:
a. any state college or university or a technical college or institute or an independent
college or university located in Louisiana that is accredited by a regional
accrediting association, or its successor, approved by the U.S. Secretary of
Education and eligible to participate in a program under Title IV of the Higher
Education Act of 1965 (20 U.S.C. 1088), as amended; or
Revised 1-01-11 17
b. a public or independent college or a university located outside of Louisiana that is
accredited by one of the regional accrediting associations, or its successor, approved
by the U.S. Secretary of Education and eligible to participate in a program under
Title IV of the Higher Education Act of 1965 (20 U.S.C. 1088), as amended; or
c. a Louisiana licensed proprietary school, licensed pursuant to R.S. Chapter 24-A of
Title 17, and any subsequent amendments thereto and is eligible to participate in a
program under Title IV of the Higher Education Act of 1965 (20 U.S.C. 1088), as
amended.
ETA: 53. Where can my beneficiary use START funds?The beneficiary can use START funds at any eligible educational institution. For START Saving
Program purposes, an “eligible educational institution” is:
a. any state college or university or a technical college or institute or an independent
college or university located in Louisiana that is accredited by a regional
accrediting association, or its successor, approved by the U.S. Secretary of
Education and eligible to participate in a program under Title IV of the Higher
Education Act of 1965 (20 U.S.C. 1088), as amended; or
Revised 1-01-11 17
b. a public or independent college or a university located outside of Louisiana that is
accredited by one of the regional accrediting associations, or its successor, approved
by the U.S. Secretary of Education and eligible to participate in a program under
Title IV of the Higher Education Act of 1965 (20 U.S.C. 1088), as amended; or
c. a Louisiana licensed proprietary school, licensed pursuant to R.S. Chapter 24-A of
Title 17, and any subsequent amendments thereto and is eligible to participate in a
program under Title IV of the Higher Education Act of 1965 (20 U.S.C. 1088), as
amended.
This post was edited on 7/14/11 at 2:54 pm
Posted on 7/14/11 at 2:50 pm to LSUTexan78
quote:
How can LA afford this? I would be interested to see the annual cost to the taxpayers. Any stipulations on where the funds must be used? (ie. Louisiana universities)
Really? I've got a long list. I'll add this one to it.
Posted on 7/14/11 at 2:54 pm to LSUAfro
quote:
Really? I've got a long list. I'll add this one to it.
I am kind of surprised that the LA legislator didn't rid themselves of this matching obligation when all the cuts were being made to education. The AGI numbers required for the match are fairly low. I wonder how many folks in that earnings bracket take advantage of the match - would be interesting to read.
As an aside, what is the current status of TOPS?
Posted on 7/14/11 at 2:59 pm to saint308
Thanks for the information. Sounds like a pretty attractive savings plan for LA residents. I can't endorse the match as fiscally responsible for the State but I understand its their attempt at educating the masses.
Posted on 7/14/11 at 4:15 pm to LSUTexan78
quote:
The principal grows tax free until distribution
I thought since 529 contributions were after tax money all of the distributions were tax free?
Posted on 7/14/11 at 4:25 pm to rlp
They do. Sorry if I typed anything that suggested the contrary. Distributions are tax free if they are made for qualified higher education expenses. Only nonqualified withdrawals are taxable.
Posted on 7/15/11 at 7:22 am to LSUTexan78
Whew....thanks!
Posted on 7/15/11 at 9:43 am to shutterspeed
quote:
Plus, it's actually guaranteed by the state. Seems like a good deal.
LINK
Are you talking MPACT or MACS?
LINK
quote:
Are my investments guaranteed?
No Account is insured or guaranteed a return on its principal or investment, except for TIAA-CREF Life Insurance Company’s guarantee to the Mississippi Affordable College Savings Program under the Funding Agreement for the Guaranteed Option. The remaining Investment Options have varying degrees of risk and are not guaranteed.
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