Edvest’s tax advantages add up

If you save with Edvest, you probably already know that you are eligible for some tax advantages. But, do you know what they are and how they add up? Read on to find out.

Tax-free earnings

Investment earnings grow tax-deferred – at both the federal and state level. They may be withdrawn tax-free so long as they’re used for higher education expenses such as tuition, room/board, books, computers/tablets and related technology costs such as Internet access.

Consider this example: If you initially invested $5,000 in your Edvest account, contributed $100 per month at a 6% annual rate of return over the course of 18 years, you would have $54,958 dollars saved for your child’s education.

Now, if you had invested the same way in a savings account that did not offer tax-free growth, your savings would amount to $46,788 (assuming a 28% federal and 5% state tax).

That’s a difference of $8,170, and when it comes to paying for higher education expenses, you can be sure it could be put to good use. *

Other tax advantages

Along with tax-free growth, Edvest accounts also offer advantages for estate planning and Wisconsin state income tax deductions. Wisconsin residents may be able to reduce their taxable income by $3,100 per beneficiary per year. You don’t need to be a family member to claim this benefit, though you do need to be a Wisconsin resident.

If you contribute greater than the eligible amount, it may be used for subsequent years benefits until exhausted. Depending on how much you contribute, you may be eligible for several years of state income tax deductions after your contribution.

Visit our website to learn more about the federal and state tax advantages of saving with Edvest.

Have questions? Contact the Edvest College Savings Plan directly at 1-888-338-3789, Monday – Friday, 7 a.m. to 7 p.m. and visit http://529.wi.gov/ for the latest state tax information.

For more info or to open an account, visit www.edvest.com

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.

 

*This example assumes an initial investment of $5,000, monthly contributions of $100, and a 6% annual rate of return over 18 years. The taxable account assumes a 28% federal and 5% state tax rate. The illustration does not represent the performance of any specific portfolio.