Named after section 529 in the Internal Revenue Code, the 529 plan in the US has several tax advantages that benefit investment.
The 529 plan of the state of Pennsylvania, known as the College Savings program, is often touted as the best 529 plan in the country, and not without reason. This plan has several advantages for the both the discerning investor looking for tax deductions, as well as the concerned parent making long term plans for his or her child's college education.
The following are some points which set the PA 529 plan apart from the rest of the 529 state plans:-
1. All contributions on the College Savings Plan of Pennsylvania State are partly deductible. If the contributor is filing singly, then the limit on the deductions is up to $10,000; and this amount remains same for married couples filing jointly.
2. A huge maximum contribution is allowable in the state of Pennsylvania, and that is $344,000. This money can be withdrawn for both qualified and nonqualified purposes. Withdrawals for qualified purposes at any point of time attract no penalties. But, the earnings can also be removed for a nonqualified purpose. In that case, a penalty of 10% is imposed on the amount that is removed.
3. The costs of getting into the plan are very less. There is no enrollment fee, and there is no annual maintenance fee for keeping up with this plan. There is a very small program management fee, which varies between $0.5 and $0.7.
4. This plan is an outstate favorite, because outstate residents can contribute into the plan and enjoy the same benefits as the instate residents. Qualified withdrawals from other state 529 plans into the PA 529 plan are exempt from taxes.
5. There is no broker required for buying the PA 529 plan. Residents can buy the plan directly.
6. The minimum amount to open an account is $25 for both instate and outstate residents, which is lower than the minimum amount with other states. In addition, a $25 purchase needs to be made when opening the account.
7. There is an automatic investment plan provided with the PA 529 plan, and there is no restriction on how often you contribute to the automatic investment plan. The automatic investment plan also needs a minimum additional purchase of $25.
On observing all these points, it is obvious that the college investment plan of Pennsylvania is very welcoming to people from other states. It is a very cheap and profitable investment plan, which is also very good for the instate residents.
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