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The Benefit of Tax-Free Withdrawals*

Accumulate savings faster with tax-deferred growth
The money you earn in a 529 plan is not subject to federal or state income taxes as long as it remains in the plan. This can help your account grow faster since all of your earnings can be reinvested, increasing returns with tax-free compounding.

Withdraw earnings without being taxed
In addition, no federal or state** taxes are due when money is withdrawn from your 529 account and applied to qualified expenses: tuition, room and board, books, supplies and fees at most colleges, graduate schools and universities.

 

Tax Deferred Growth

The returns are hypothetical and do not represent the performance of any investment. This illustration assumes that no withdrawals are made which would not qualify as educational expenses. This hypothetical graph is intended to compare a taxable investment account and a 529 tax-deferred account under the following assumptions: A) one lump sum contribution of $60,000 of after-tax amounts is invested  and all earnings, gained at annual average rate of 7%, compounded annually, are continually reinvested and B) the taxable account is subject to an annual income tax on earnings at an aggregate rate of 30% (which may be both federal and state). No assumptions are made as to the disposition of the accounts following the 10th year.  Source: Savings for College

 

*Withdrawals which are not for qualified higher educational expenses may be taxed as ordinary income and may be subject to a federal 10% additional tax.

** Earnings withdrawn by AL residents from a non-AL plan are subject to AL income tax.



NOTICE: CollegeAccess 529 Plan accounts are not insured by any state, and neither the principal deposited nor any investment return is guaranteed by any state. Furthermore, the accounts are not insured, nor the principal or any investment return guaranteed, by the federal government or any federal agency.

 

Before investing, an individual should consider whether their state of residency — or their intended designated beneficiary's state of residency — offers any benefit, such as a state tax deduction, or any other benefits that are only available for investments in that state's 529 savings program.

 

An investor should consider the investment objectives, risks, and charges and expenses of the CollegeAccess 529 Plan before investing. This and other important information is in the Plan Disclosure Statement, which should be read carefully before investing, and which is available on this Web site. Click here to download a copy.

 

The Program Manager for the CollegeAccess 529 Plan is Allianz Global Investors Distributors LLC, 1633 Broadway, New York, NY 10019-7585, 1-866-529-7462. The Plan is issued by the South Dakota Higher Education Savings Trust and is underwritten by Allianz Global Investors Distributors LLC.

 

Withdrawals from a 529 Plan for qualified expenses are free from federal income tax. Qualified expenses include tuition and fees, room and board, books and other supplies.

 

State taxes may apply for residents of states other than South Dakota. Speak to your tax or financial advisor.

 

Non-qualified withdrawals are subject to federal income tax and a 10% penalty tax on earnings, with some exceptions, and may also be subject to state tax.

 

Please see the Plan Disclosure Statement  for our privacy policy.

 

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