Federal & State Tax Advantages
Deductions, deferrals and tax free
For Colorado residents, contributions to a CollegeInvest
plan are deductible from Colorado state income tax in the year the contribution
is made.1 This represents a 4.63 percent tax savings on contribution dollars up to the amount of reported income for that year! Even if an account
holder or beneficiary resides outside of Colorado, any contributor with Colorado income is eligible for this deduction.
Savings also benefit from federal and state tax deferred treatment. While assets are saved in a CollegeInvest college savings account, growth in the account is tax deferred from federal and state taxes. Additionally, when the funds of a CollegeInvest savings account are used for qualified higher education expenses, withdrawals are federal and state tax-free.2
Withdrawals made for purposes other than qualified education expenses are subject to a 10 percent penalty on earnings and taxed by both the federal and state authorities. State tax deductions may also be subject to recapture. Special exceptions to the penalty may be an option in the case of a beneficiary scholarship or the death of a beneficiary. Please reference the plans' PDS for further details on these exceptions.
1 Contributions to the Plan(s) are deductible from Colorado state income tax in the tax year of the contribution, up to your Colorado taxable income for that year. Such deductions are subject to recapture in subsequent years in which non-qualified withdrawals
2 The earnings portion of a non-qualified withdrawal is subject to federal income taxes and any applicable state income tax, as well as an additional 10% federal penalty tax.
To learn about CollegeInvest’s 529 program, its objectives, risks, charges, expenses, limitations, restrictions and qualifications regarding the Plans’ benefits and potential tax advantages, please read and consider carefully the Program Disclosure Statements (PDS) available at www.collegeinvest.org before investing. Also, check with your or your beneficiary’s home state to learn if it offers tax or other benefits for investing in its own plan. Administered and issued by CollegeInvest.
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