Take advantage of the tax benefits of Edvest

Tax season is a great time to take stock of all the tax benefits of a 529 college savings plan. Here are three great ways that Edvest can help you reduce your taxes while saving for college:

1. Tax-Free Growth. When Edvest funds are used for qualified higher education expenses, such as tuition, room and board, books, and more, account holders may potentially enjoy tax-free growth. This means that the earnings portion of any distributions used to pay for such expenses will be free from federal and Wisconsin income tax. The savings may be substantial over time, as demonstrated in this example:


 2. State Tax Benefit. If you are a Wisconsin taxpayer, your contributions to Edvest may reduce your Wisconsin taxable income up to a maximum of $3,000 per beneficiary per year. If you’ve made contributions to Edvest in 2013, you may wish to include them as you file your 2013 Wisconsin state income taxes. To learn how to claim this benefit, review the instructions for “Contributions to a Wisconsin State-Sponsored College Savings Program” in your Wisconsin Income Tax 2013 Booklet, or visit the Wisconsin Department of Revenue Website. Consider making consistent contributions throughout 2014 to maximize your potential state tax opportunity.

3. Gift and Estate Tax Benefits. Did you know that value of your Edvest account is not considered part of your estate? And money may be gifted – up to $14,000 per year ($28,000 per married couple) – to avoid gift tax or generation-skipping tax (GST). To learn more about estate planning and gift tax exemptions, visit the 529 Q&A page on the Internal Revenue Service’s website.


“Tax benefits can be powerful advantages to investing in a 529 plan when saving for college,” says James DiUlio, Director of Wisconsin’s 529 College Savings Program. “Now that you are aware of all the tax benefits of an Edvest College Savings Plan, you can begin to take advantage of them.”

For more tips on how parents can maximize the tax benefits of 529 plans, check out this article from U.S. News & World Report.


The tax information contained herein is not intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor. Non-qualified withdrawals may be subject to federal and state taxes and the additional federal 10% tax.