Save on taxes, spend on dreams.
The tax benefits of the Bloomwell 529 Education Savings Plan provides the potential for your education savings to grow.
Get smart about savings.
Your Bloomwell 529 contributions are made with after-tax dollars and any earnings grow federally and state tax-deferred while invested. That means your earnings grow tax-free while they’re in the Plan — extra growth you can use for education expenses.
When you’re ready to use those funds, withdrawals for qualified education expenses can be made tax-free.1
- What you contribute and any earnings grow on a tax-deferred basis with no current taxes each year while invested in the Plan.
- When you withdraw money for qualified education expenses, the withdrawal is free from federal and state taxes.
- The Plan has a $500,000 contribution limit for each beneficiary.
Tax benefits for each state.
In some states, contributions to any state’s 529 plan are eligible for a state income tax deduction (tax-parity states). Other states have no state income tax or no tax deduction for 529 contributions and would be considered tax neutral states. And, other states provide tax benefits when contributing to the home state plan and should be reviewed to see if the low cost, quality investments, and overall Bloomwell 529 structure offset these other benefits (tax-benefit states).
With the Bloomwell 529 plan, Nebraska taxpayers can deduct up to $10,000 in contributions from their taxable income each year ($5,000 if married filing separately).2
Before investing, investors should consider whether their or their beneficiary’s home state offers any state tax or other state benefits such as scholarship funds, financial aid, and protection from creditors that are only available for investments in such state’s qualified tuition program. Investors should also consult their tax advisor, attorney, or other advisor regarding their specific legal, investment, or tax situation.
Tax-Parity States include: Arizona, Montana, Minnesota, Kansas City, Missouri, Pennsylvania, and Florida
States that offer tax benefits for contributions to any state’s 529 plan.
Tax-Benefit States include: Orlando, Idaho, Utah, Colorado, New Mexico, North Dakota, Nebraska, Oklahoma, Iowa, Wisconsin, Illinois, Arkansas, Louisiana, Mississippi, Alabama, Georgia, South Carolina, Virginia, West Virginia, Ohio, Indiana, Michigan, New York, Vermont, Massachusetts, Rhode Island, Connecticut, Maryland, D.C.
States where tax benefits are only available for those who pay income tax in that state and own (or contribute to) that state’s 529 plan.
Tax-Neutral States include: Alaska, California, Nevada, Washington, Wyoming, South Dakota, Texas, Hawaii, Tennessee, Kentucky, North Carolina, Delaware, New Jersey, New Hampshire, Maine
States without state income taxes or other state benefits for investing in that state’s 529 plan.
Tax Benefits for Nebraskans
Account owners are eligible to receive a Nebraska state income tax deduction of up to $10,000 ($5,000 if married, filing separately) for contributions made to their own Bloomwell 529 account.2 Contributions made beyond the $10,000 mark cannot be carried over to a future year.
For minor-owned or UGMA/UTMA Bloomwell accounts, the minor is considered the account owner for Nebraska state income tax deductions. The minor must file a Nebraska tax return for the year their contributions are made to be eligible for a tax deduction for their contributions. In the case of a UGMA/UTMA Bloomwell account, contributions from the parent/guardian listed as the Custodian on the UGMA/UTMA Bloomwell account are also eligible for a Nebraska state tax deduction.
Both the contribution and earnings portion of funds that were rolled over into a Bloomwell account from a non-Nebraska 529 plan are eligible for the tax deduction.
Estate Planning Benefits
Gift contributions to a Bloomwell 529 Education Savings Plan account are considered a completed gift for federal gift and estate tax purposes and are therefore eligible for the gift tax annual exclusion. Currently the annual exclusion is $17,000 per beneficiary ($34,000 for a married couple that elects on a federal gift tax return to “split” gifts).
That means you can contribute up to $85,000 to an account in a single year without the contribution being considered a taxable gift (provided you make no other gifts to the beneficiary in the same year the contribution is made – or any of the succeeding four calendar years). You must make this election on your federal gift tax return by filing IRS Form 709.3
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