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General Operation |
If assets are used for qualified higher education expenses, including computer (technology and equipment purchased in 2009-2010) earnings are exempt from federal taxes; otherwise tax-deferred and subject to a 10% penalty. States may tax earnings when withdrawn. Georgia allows deduction of $2,000-Single, $4,000-MFJ for Georgia 529 plan. |
Same as 529 Plan
Can also be used for qualifying primary and secondary school expenses |
Taxable. Kiddie Tax applies for children under 19.
If a full time student, Kiddie Tax applies throughout ages 19-23. |
Tax exempt if used for qualified higher education expenses IF redeemed in the same year of expense.
Tax exclusion phase-out for MAGI is less than $82,100 or $130,650 for MFJ. |
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Funding Limits |
Previously a one time deposit of 5 years of gift tax ($13,000 x 5=$65,000). Now prudent cost of 4 years of qualified college expenses. |
$2,000 per year |
$13,000 per year (Annual Gift Limit) |
$13,000 per year (Annual Gift Limit) |
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Distribution Requirements |
Plan governs by specific age. |
Distribute by 30, but can roll over to younger beneficiary |
UGMA becomes child’s account at age 18 (GA), 21 (SC).
UTMA becomes child’s account at age 21 (GA), N/A (SC). |
Distribute in year needed. Held to maturity date earns interest. Interest is taxable at maturity. |