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The account can be used without penalty to pay for qualified education expenses at accredited post-secondary institutions anywhere in the U.S. Your client may withdraw money at any time; Qualified withdrawals may be used for tuition, fees, books, supplies, equipment required for enrollment, and room and board.
The earnings portion of a withdrawal used for qualified education expenses is federally tax-free. (non-qualified withdrawals are subject to 10% penalty and state and federal income taxes)
The state income tax advantage should not be the primary reason to invest in Learning Quest Advisor. Instead, consider the goal and related factors that will be critical to creating adequate investment needed to pay for college:
If your client does not use the withdrawal for qualified educational expenses, the earnings portion is subject to a 10% federal penalty tax plus required taxes. Your client can request a penalty-free withdrawal in the event of the death or disability of the student or if the student receives a scholarship.
You can change the beneficiary at any time in order to keep the account going and avoid (or at least delay) taking non-qualified withdrawals when the original beneficiary doesn't need those funds.
Federal financial aid may be available to a student even if a parent or student owns a 529 account. Part of the financial aid process is to determine a student's financial need. Parents will need to include 529 assets on which they are the Account Owner as an investment in calculating their net worth on the Free Application for Federal Student Aid (FAFSA). Assets in a 529 account owned by a student, or a custodian of the student, will also be considered assets of the parents. Assets held in a 529 account by someone other than the parents or student, such as grandparents, are not considered in the calculation for financial aid.
NOTE: This information is only a summary and not intended as advice. You should consult a financial aid advisor or the U.S. Department of Education's website at www.ed.gov for more information about financial aid.
Yes. Contributions can be made to both a Coverdell Education Savings Account and a 529 college savings plan in the same year for the same beneficiary. Clients may also transfer money from an Education Savings Account to Learning Quest Advisor. This provision also includes rollovers from one state's 529 plan to another state's 529 plan once per 12-month period.
There should be no reduction in death benefit or survivor benefit. Presently, there are no rules that govern 529s with Social Security in this regard.
For Kansas taxpayers UGMA/UTMA and Coverdell ESA "transfers" will allow for a deduction for the beneficiary (who must become the account owner) for the full amount (up to $3,000 for single filers and $6,000 for married filing jointly) transferred into the Learning Quest account. Keep in mind that the "new" account owner/beneficiary must have an income to take a deduction. If you live in other states, please consult a tax advisor for information about deductability.
Yes, account access is provided through 529 QuickView and DST Vision .
No matter which state they live in, they can invest in Learning Quest Advisor.
Contact the dedicated Learning Quest Advisor Service Team to find out more about building your business with college savings solutions.
IRS Circular 230 Disclosure: This communication was written in connection with the promotion or marketing, to the extent permitted by applicable law, of the transaction(s) or matter(s) addressed herein by persons unaffiliated with American Century Companies, Inc. American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, to the extent this communication contains any discussion of tax matters, such communication is not intended or written to be used, and cannot be used, for the purpose of avoiding tax penalties. Any recipient of this communication should seek advice from an independent tax advisor based on the recipient's particular circumstances.
This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.
The availability of tax or other state benefits (such as financial aid, scholarship funds and protection from creditors) may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors.
As with any investment, withdrawal value may be more or less than your original investment.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
Before investing, carefully consider the plan's investment objectives, risks, charges and expenses. This information and more about the plan can be found in the Learning Quest Advisor Handbook, available by contacting your financial advisor or American Century Investment Services, Inc., Distributor, at 1-800-345-6488, and should be read carefully before investing. If you are not a Kansas taxpayer, consider before investing whether your or the beneficiary's home state offers a 529 Plan that provides its taxpayers with state tax and other benefits not available through this plan.
Notice: Accounts established under Learning Quest and their earnings are neither insured nor guaranteed by the State of Kansas, the Kansas State Treasurer or American Century Investments.
Administered by Kansas State Treasurer Jake LaTurner
Managed by American Century Investment Management, Inc.