![]() These states offer a tax deduction for contributing to any 529 plan, including out-of-state plans, which may be more attractive than the in-state option. 4 Tax-parity states include Arizona, Kansas Missouri, Montana and Pennsylvania. citizen or resident alien, have a Social Security number or Tax Identification number and have a permanent U.S. ![]() 2 Virginia’s 529 plan has a 30-year limitation on use of assets. Any appreciation on the entire original gift is not considered part of the estate. If the contributor dies before the five-year prorating period expires, the contributions allocated to the remaining years move back into the contributor’s taxable estate. 1Under a special rule, contributions can be made in one year and prorated over a five-year period without incurring gift taxes or reducing your unified estate and gift tax credit. **Expenses for books, supplies, and equipment required for a program registered with the U.S. Amount that may be treated as qualified expense shall not exceed $10,000 as a lifetime cap per beneficiary. *Amounts paid as principal or interest on a qualified education loan. As 529 plans invest across asset classes, they may be negatively impacted by market losses. Inherent investment risks. As with any other type of investment, 529 plans carry some risk.By transferring 529 plan assets to another beneficiary, you typically can avoid penalties and continue to enjoy any tax benefits. Taxes and penalties. If you withdraw funds for anything other than qualified expenses, you can incur penalties and will be subject to applicable state and/or federal taxes. ![]() For instance, some states allow 529 plan assets to be used for K-12 tuition expenses. ![]()
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