This month, celebrate Financial Literacy Month by learning how a 529 plan can help families save for the higher education of a loved one. Between now and May 31, my office is sponsoring a financial education tool that explores the benefits of using a 529 plan to save for future college expenses. Anyone who completes this 10-minute online tutorial is automatically registered for a chance to win a $1,000 College Savings Iowa account.
A Message from State Treasurer Michael Fitzgerald
In 1998, my office worked to pass legislation establishing College Savings Iowa, Iowa’s direct-sold 529 college savings plan. Named after section 529 of the Internal Revenue Code, 529 plans offer a tax-advantaged way to save for higher education. Participants can save for anyone – children, grandchildren, friends or even themselves – and contributions grow tax-deferred. Iowa taxpayers who invest in College Savings Iowa can deduct up to $3,188 in contributions per beneficiary account from their 2016 adjusted gross income.* Withdrawals are exempt from federal income tax when used for qualified higher-education expenses, including tuition, room and board, books and computers.** The plan also offers flexibility, allowing funds to be used at any accredited college, university, community college or technical training school in the United States or abroad.
Last fall, my office introduced an online 529 tutorial called College Savings Iowa InFocus. This 10-minute interactive learning experience examines the ins-and-outs of 529 plans while detailing the specific benefits of College Savings Iowa. Anyone who registers for and completes the tutorial between now and May 31 is automatically registered to win a $1,000 College Savings Iowa account. In addition, College Savings Iowa will contribute $10 to the first 500 people who complete the tutorial and open a new College Savings Iowa account. The newly established accounts must have a minimum $25 contribution and be opened within the first calendar month of tutorial completion to be eligible for the $10 contribution. Visit Iowa529InFocus.com to complete the tutorial and see official rules.
While College Savings Iowa InFocus explores saving for higher-education in a 529 plan, its lessons really speak to the heart of my office’s mission: by starting early, saving regularly and making smart investment choices, people can make their savings work for them. Whether planning for college, a house or retirement, it’s never too early (or too late) to begin saving for the future.
Michael L. Fitzgerald
Treasurer of State
Note: Effective for tax years beginning on or after January 1, 2015, Iowa taxpayers may now elect to treat contributions to their College Savings Iowa account made up through the deadline (excluding extensions) for filing an individual Iowa state income tax return (generally April 30).
*Adjusted annually for inflation. If withdrawals are not qualified, the deductions must be added back to Iowa taxable income. The availability of tax or other benefits may be contingent on meeting other requirements.
**Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
Investment returns are not guaranteed and you could lose money by investing in the plan. Participants assume all investment risks as well as responsibility for any federal and state tax consequences. If you are not an Iowa taxpayer, consider before investing whether your or the designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program.
For more information about the College Savings Iowa 529 Plan, call 888-672-9116 or visit www.CollegeSavingsIowa.com to obtain a Program Description. Investment objectives, risks, charges, expenses, and other important information are included in the Program Description; read and consider it carefully before investing. Vanguard Marketing Corporation, Distributor.