SOURCE: Pennsylvania Treasury

Pennsylvania Treasury

December 21, 2015 08:00 ET

Still Time to Save on College Expenses and Pennsylvania Taxes With PA529 College Saving Plans

Contribute by December 31 to Maximize 2015 State Tax Deductions; Those Opening New Accounts Save $50 on Guaranteed Savings Plan Enrollment Fee

HARRISBURG, PA--(Marketwired - December 21, 2015) - State Treasurer Timothy Reese today reminded Pennsylvanians that there is still time to reduce their 2015 state taxes by saving for college with the Pennsylvania 529 College Savings Program. Pennsylvanians who open or contribute to a PA 529 account by December 31 can take advantage of a state income tax deduction and federal gift tax exclusion.

"Before Pennsylvania families celebrate 2016 they should make time to contribute to a PA 529 account before the end of 2015. Doing so can reduce a family's 2015 state taxes by hundreds of dollars per child and every dollar saved now could be one less they need to pay for higher education in the future," Treasurer Reese said.

Taxpayers can deduct the minimum monthly contribution of $15, or $180 annually, up to the maximum of $14,000 per beneficiary in PA 529 contributions from Pennsylvania taxable income on their state tax returns for 2015. Married couples filing jointly can deduct up to $28,000 per beneficiary if each spouse has taxable income of at least the amount deducted. Married couples filing jointly can deduct up to $28,000 per beneficiary if each spouse has taxable income of at least the amount deducted. In addition to account owners, family and friends can also contribute up to $70,000 in a single year ($140,000 for a married couple filing jointly) for each beneficiary without incurring federal gift tax consequences (assumes no other gifts in the next four years).

PA 529 savers also receive even more valuable tax advantages, the Treasurer noted. Earnings in a 529 plan are not subject to yearly taxes as they grow, and when used for qualified expenses such as tuition or room and board, earnings are tax-exempt when withdrawn.

"Last year, Pennsylvanians saved millions on their state income taxes because they invested in a 529 plan," said Treasurer Reese. "Anyone can contribute -- family members, friends, and neighbors -- and take advantage of this deduction. Simply visit www.PA529.com by December 31."

The PA 529 College Savings Program provides two ways to save: the PA 529 Guaranteed Savings Plan (GSP) and the PA 529 Investment Plan (IP). Both plans provide flexibility to pay for college expenses at most higher education institutions across the country. The primary difference between the two plans is the way savings grow.

Growth in the PA 529 GSP is based on tuition inflation. Save enough for one, ten or even more credits today and have enough to pay for that many credits in the future, no matter how much tuition has increased in the meantime. Treasury is offering free enrollment -- a $50 savings -- for all new PA 529 GSP accounts opened by December 31 at www.PA529.com. Use enrolment code 2015 when prompted.

The second plan, the PA 529 IP, features low fees and more than a dozen conservative and aggressive investment options from The Vanguard Group, one of the nation's largest financial services companies. There is no enrollment fee for the PA 529 IP.

To learn more, or to contribute to or open a PA 529 account, visit www.PA529.com or call (800) 440-4000.

The Pennsylvania Treasury is an independent department of state government led by the state treasurer, who is elected every four years. The department's primary duty is to safeguard and manage the state's public funds. It invests state money to generate income on behalf of the citizens of Pennsylvania, reviews and processes payments for state government agencies, and serves as custodian of more than $100 billion in state funds. Key Treasury programs include Unclaimed Property, PA 529 College Savings Program and the Board of Finance and Revenue. The Pennsylvania 529 College Savings Program sponsors two plans -- the PA 529 Guaranteed Savings Plan (GSP) and the PA 529 Investment Plan (IP). The guarantee of the PA 529 Guaranteed Savings Plan is an obligation of the GSP Fund, not the Commonwealth of Pennsylvania or any state agency. Before investing in either plan, please carefully read that plan's disclosure statement (available at www.PA529.com or by calling (800)440-4000) to learn more about that plan including investment objectives, risks, fees and tax implications.

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