What are the federal income tax advantages?
Any earnings on the money you invest in your account will grow tax-deferred until they are distributed. All qualified distributions for education expenses will be exempt from federal income tax. (Earnings on non-qualified distributions will be subject to income tax and a 10% federal penalty.) Please note that state income taxes may continue to apply. Depending upon the laws of the home state of the account holder or beneficiary, favorable state tax treatment or other benefits offered by that home state may be available only for investments in the home state’s 529 college savings plan. If your state or your designated beneficiary’s state offers a 529 plan, you should consider any state income tax or other benefits it offers before investing. For more information, please contact your financial consultant.
