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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.
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
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.
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.