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State. Tax Treatment of 529 Plan Contributions. California. No deduction or credit. Illinois. Maximum deduction of $10,000 ($20,000 for married joint filers) per year
Unused funds in a 529 plan can now be ... Previously, if the family wanted to withdraw the $35,000 and use it for something else, they would pay a 10% penalty and owe income taxes on the amount.
For example, if $50,000 is contributed to a 529 plan, where it grows to $60,000 over time, and an unqualified withdrawal is made for the entire amount, the $10,000 gain is taxable and a 10% penalty on the $10,000 is applicable (i.e. $1,000). [citation needed]
A 529 plan is a tax-advantaged savings plan designed to help parents or grandparents cover the costs of their child’s or grandchild’s education. ... you can withdraw that same amount from your ...
This tax-advantaged account offers several benefits, including tax-free growth and withdrawals for qualified education costs like college tuition, K-12 tuition and apprenticeship programs.
The 529 plan must be open for at least 15 years before attempting the 529-to-Roth rollover. And funds deposited in the last five years and their associated interest are not eligible for this transfer.
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