529 Plan Tax Benefits
The power of tax-free growth
With the Advisor-Guided Plan, investment earnings compound on a tax-deferred basis, and qualified withdrawals are federal tax free.1 Because your account is tax-deferred, it has the potential to grow faster than taxable investments earning the exact same returns. Tax-free growth helps every dollar invested toward college savings really count.
Source: J.P. Morgan Asset Management. Illustration assumes an initial lump sum investment of $10,000 and subsequent monthly investments of $150 thereafter for 18 years. Chart also assumes an annual investment return of 6% and federal tax rate of 28%. Investment losses could affect the relative tax-deferred investment advantage. Each investor should consider his or her current and anticipated investment horizon and income tax bracket when making an investment decision, as the illustration may not reflect these factors. This hypothetical illustration is not indicative of any specific investment and does not reflect the impact of fees or expenses.
The chart is shown for illustrative purposes only. Past performance is no guarantee of future results.
Additional tax benefits for New York state taxpayers
New York taxpayers who open an account in New York's 529 Advisor-Guided College Savings Program can enjoy additional tax benefits. Account owners can deduct up to $5,000 ($10,000 if married filing jointly) in contributions from New York state income taxes each year.2
Potential tax savings for residents of other states
In some states, contributions to any 529 plan are eligible for the state's income tax deduction, and residents are not required to choose the in-state plan to get the benefit. Before investing, you should consider whether your home state offers any state tax or other benefits that are only available to residents. Your financial advisor or tax advisor can provide additional details.
Special estate and gift tax benefits
Contributions to 529 plans are considered completed gifts, which means current assets and future earnings are excluded from your taxable estate for federal estate tax purposes - even though you retain control of the assets for the life of the account.3 529 plans also allow you to contribute five years' worth of gifts in one year, up to $70,000 per beneficiary (or $140,000 if married and filing jointly) without incurring a federal gift tax, making it a valuable way to reduce the size of your taxable estate or make up for lost time as beneficiaries approach college age.4
1Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. Tax and other benefits are contingent on meeting other requirements and certain withdrawals are subject to federal, state and local taxes.
2Contributions may be subject to recapture in certain circumstances, such as rollovers to another state’s plan or non-qualified withdrawals.
3Limitations may apply. Please review the Advisor-Guided Plan Disclosure Booklet for details.
4No additional gifts can be made to the same beneficiary over a five-year period. If the donor does not survive the five years, a prorated portion of the gift is returned to the taxable estate.
INVESTMENTS ARE NOT FDIC INSURED, MAY LOSE VALUE AND ARE NOT BANK GUARANTEED.
Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program.
The Comptroller of the State of New York and the New York State Higher Education Services Corporation are the Program Administrators and are responsible for implementing and administering the Advisor-Guided Plan. Neither the State of New York nor its agencies insures accounts or guarantees the principal deposited therein or any investment returns on any amount or investment portfolio.
Ascensus Broker Dealer Services, Inc. and Ascensus Investment Advisors, LLC (formerly Upromise Investments, Inc., and Upromise Investments Advisors, LLC) serve as Program Manager and Recordkeeping and Servicing Agent, respectively, and are responsible for day-to-day operations, including effecting transactions. J.P. Morgan Investment Management Inc. serves as the Investment Manager. J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. JPMorgan Distribution Services, Inc. markets and distributes the Advisor-Guided Plan. JPMorgan Distribution Services, Inc. is a member of FINRA/SIPC.
New York's 529 College Savings Program includes two separate 529 plans. The Advisor-Guided Plan is sold exclusively through financial advisors who have entered into Advisor-Guided Plan selling agreements with JPMorgan Distribution Services, Inc. You may also participate in the Direct Plan, which is sold directly by the Program and offers lower fees. However, the investment options available under the Advisor-Guided Plan are not available under the Direct Plan. The fees and expenses of the Advisor-Guided Plan include compensation to the financial advisor. Be sure to understand the options available before making an investment decision.
For more information about New York's 529 Advisor-Guided College Savings Program, you may contact your financial advisor or obtain an Advisor-Guided Plan Disclosure Booklet and Tuition Savings Agreement at www.ny529advisor.com or by calling 1-800-774-2108. This document includes investment objectives, risks, charges, expenses, and other information. You should read and consider it carefully before investing.
The Program Administrators, the Program Manager and JPMorgan Distribution Services, Inc., and their respective affiliates do not provide legal or tax advice. This information is provided for general educational purposes only. This is not to be considered legal or tax advice. Investors should consult with their legal or tax advisors for personalized assistance, including information regarding any specific state law requirements.