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Finally, something Pennsylvanians have been waiting for has arrived. Recent legislation just gave citizens of our fine state two more reason to save for higher education using a 529 plan.
There are several choices we have to save for our children and grandchildren‘s future. This column, however, will focus on the 529 this month.
Wow, as a Pa citizen, you can deduct up to $12,000/year per 529 plan beneficiary on your income tax return regardless of which 529 plan in the country you choose to participate. If you are a married couple filing jointly that number increases to $24,000/year per beneficiary.
Second, not only does the principal and earning grow tax deferred, the earning will now be state tax free as well as the original federal tax free when used for qualified higher education.
These rules are based on the provisions of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001. The only problem is, unless legislatively expected, these provisions will revert back to tax laws in effect prior to passage of EGTRRA.
So, its not perfect but is sure is looking better.
08/06 - BACK
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