Lifetime contribution limits of $250,0001
Required Income Level
No income restrictions
|Age Limit of Beneficiary||
No age requirements
No federal deductions for contributions; certain states allow residents to deduct contributions from state income tax
Earnings on qualified withdrawals are not subject to federal income tax
Qualified withdrawals may not be subject to state income tax (depending on state)
Earnings on non-qualified withdrawals are subject to federal income tax that is paid by account owner
|Penalty for Non-Qualified Withdrawals||
10% federal penalty on earnings portionPossible state penalty (depending on state)
Account owner decides when withdrawals are made and for what purpose2
Account owner is free to change the designated beneficiary without tax consequences
Must choose among investment portfolios offered by plan3
Contributions may go into a single investment portfolio based on child's age
Limited opportunities to change investment options
- Anyone can open an account
- No income limitations or age restrictions
- High contribution ceiling - up to $250,000
- Earnings grow tax free
- Qualified withdrawals are not subject to federal (and, in some cases, state) income taxes
- Can change beneficiaries at any time4
- No financial aid effect - assets are property of account owner
1. Contributions qualify for the annual $12,000 gift tax exclusion. You can elect the 5-Year Election provision, which allows you to pre-fund the plan with a lump-sum payment of up to $55,000 per single individual and $110,000 per married couple, free of gift tax.
2. With few exceptions, beneficiary has no rights to the assets in the account.
3. Investment selection is limited to those choices offered by the state plan and plan manager has control over investment of assets.
4. Beneficiary changes are limited to first cousin or closer relative.
NOTE: Pursuant to the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"), qualified distributions are federal tax free. The provisions of EGTRRA will expire on December 31, 2010. Unless the law is extended by Congress and the President, the federal tax treatment of 529 Plans will revert to its status prior to January 1, 2002.
PNC Investments does not provide legal or tax advice. You should consult with your personal tax advisor for additional information.
Important Investor Information: Brokerage and insurance products are:
Securities and brokerage services are provided by PNC Investments LLC, a registered broker-dealer and investment adviser and member FINRA, and SIPC. Annuities and other insurance products are offered by PNC Insurance Services LLC, a licensed insurance agency.