Benefits of dating in college

16-Nov-2015 08:31

This is in contrast to other states that put a restriction, such as a maximum of $2,500, on the amount of contributions that can be deducted on residents' state income tax return.

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This amount is the maximum from all contributors combined, not from each individual investor.Withdrawals for non-educational expenses are taxable as income and you will pay a penalty of 10% of your withdrawal.To avoid this fee, keep in mind that Colorado does not have an age restriction on when the savings plan needs to be used.Your child can take years off between high school and college and still use the full plan.Of this amount, the entire $280,000 could be deducted in one year if you had at least $280,000 in income, as shown on your Federal Tax Return.This is opposed to other states that might only let you deduct a couple thousand dollars per year, even if the plan’s contribution limit is $300,000 or more.

As with most states, distributions from the Colorado Section 529 plan that are used for qualified education expenses are not subject to taxation.

Non-qualified distributions will be subject to tax and a possible “recapture” of the deduction you previously received.

529 savings plans are valuable vehicles for education planning.

Through these tax-deductible plans, family members and friends can contribute to a child's college fund, and get a tax benefit for doing so.

Over the years, with regular contributions and compound interest, the plan can grow significantly to provide for the child's educational expenses.

The State of Colorado is one of just five states that allow an “unlimited” deduction for contributions to its Section 529 accounts.