Tax friendly, now and later

CollegeBound Saver is more than just a convenient and flexible way to save for education. It also offers features like tax-deferred growth and a state tax deduction for Rhode Island tax payers. With CollegeBound Saver, saving for the future can mean saving on taxes today.

  • Use compounding to your advantage. Earnings grow tax-deferred from federal and state taxes, so your savings have the chance to potentially add up faster.
  • Pay tuition, not taxes. Withdrawals stay free from federal and state taxes when used for qualified education expenses.1
  • A smarter gift. Contributions qualify for the $15,000 annual gift tax exclusion for single filers and $30,000 per year for couples.
  • Estate benefits. Reduce your personal estate by making up to five years’ worth of gifts in one lump sum – a maximum of $75,000 for single filers and $150,000 for couples.2

 

See how the tax advantages of saving in a 529 make your dollars grow faster.

If you open a 529 account with an initial investment of $2,500 and contributed $100 every month for 18 years, there could be over $6,300 more for a qualified distribution than the same investment in a taxable account.1

Assumptions: $2,500 initial investment with subsequent monthly investments of $100 for a period of 18 years; annual rate of return on investment of 5% and no funds withdrawn during the time period specified; and taxpayer is in the 30% federal income tax bracket for all options at the time of contributions and distribution. This hypothetical is for illustrative purposes only. It does not reflect an actual investment in any particular 529 plan or any taxes payable upon distribution.

1 Earnings on non-qualified distributions may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes.
2 In the event you do not survive the five-year period, a pro-rated amount will revert back to your taxable estate.