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For immediate release:
December 27, 2011
Treasurer McCord: Only Days Remain to Save Tax Dollars by Saving for College
Contribute before December 31 to maximize 2011 state tax deductions; New accounts open for free
Harrisburg – State Treasurer Rob McCord reminded Pennsylvanians today that time is running out to reduce 2011 state taxes by saving for college with the Pennsylvania 529 College Savings Program. Pennsylvanians who open or contribute to a PA 529 account by December 31 can take advantage of a state income tax deduction and gift tax exclusion, he said.
“This is a busy time of year for families with holiday celebrations and New Year’s gatherings, but it is also a time to make year-end tax plans. Contributions to a PA 529 account before the end of the year can reduce a family’s 2011 state taxes by hundreds of dollars per child. I hope families keep that in mind and remember every dollar saved now is one less you or your child will have to pay out-of-pocket or use to pay off costly student loan interest down the road,” Treasurer McCord said.
According to Treasurer McCord, taxpayers can deduct up to $13,000 per beneficiary in PA 529 contributions from Pennsylvania taxable income on their state tax returns for 2011. Married couples filing jointly can deduct up to $26,000 per beneficiary if each spouse has taxable income of at least the amount deducted. Additionally, family and friends can contribute up to $65,000 in a single year ($130,000 for a married couple filing jointly) for each beneficiary without incurring federal gift tax consequences (assumes no other gifts in the next four years).
PA 529 savers receive even more valuable tax advantages, the Treasurer noted. Earnings in a 529 plan are not subject to yearly taxes as they grow, and when used for qualified expenses such as tuition or room and board, earnings are tax-exempt when withdrawn.
“Last year, Pennsylvanians saved more than $15.8 million on their state income taxes as a result of investing in a 529 plan,” said Treasurer McCord. “Anyone can contribute – family members, friends, and neighbors – and take advantage of this deduction. Simply visit www.PA529.com before December 31.”
To encourage more families to start saving for college in a tax-advantaged way, the McCord Treasury is offering free enrollment – a $50 savings – for all new PA 529 Guaranteed Savings Plan (GSP) accounts opened before December 31 at www.PA529.com. Use code TAXFREE when prompted. There is no enrollment fee for Pennsylvania’s other 529 plan, the PA 529 Investment Plan (IP).
The primary difference between the two plans is the way savings grow. Growth in the PA 529 GSP is based on tuition inflation. For example, if you save enough for a semester at one of Pennsylvania’s State System of Higher Education universities today, you will have enough for a semester there in the future – no matter when or how much tuition has gone up in the meantime. Returns in the PA 529 IP are based on financial market performance. The PA 529 IP features low fees and more than a dozen conservative and aggressive investment options from Vanguard, one of the nation’s largest financial services companies.
Visit www.PA529.com or call 1-800-440-4000 to contribute to or open a PA 529 account.
Media contact: Carrie Fischer Lepore, 717-772-2416 or news@patreasury.gov
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The Pennsylvania 529 College Savings Program sponsors two plans-the Guaranteed Savings Plan (GSP) and the Investment Plan (IP). The guarantee of the PA 529 Guaranteed Savings Plan is an obligation of the GSP Fund, not the Commonwealth of Pennsylvania or any state agency. Before investing in either plan, please carefully read that plan’s disclosure statement (available at www.pa529.com or by calling 1-800-440-4000) to learn more about that plan including investment objectives, risks, fees, and tax implications.
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