State Treasurer Michael L. Fitzgerald announced today that the deduction amount for those saving through College Savings Iowa for their children's educations has once again been raised. "Iowa taxpayers can now deduct the first $3,045 they contribute per beneficiary account from their state taxable income," said Fitzgerald. "This means a married couple with two children will be able to deduct up to $12,180 in College Savings Iowa contributions on their 2013 state taxes."*
In 2012, College Savings Iowa hit many milestones. The plan reduced its fees for the fourth time in five years. The annual asset-based fees of the plan's portfolio went down from 0.34% to 0.28% as of August 1. In September, the plan also reached $3 billion in assets. This means that more and more families are saving with College Savings Iowa, which allows one of the best features of College Savings Iowa to stay the same. Opening an account for a loved one is still as easy as ever. "All you need is $25 and ten minutes of your time to start saving," said Fitzgerald. "I encourage all families to save whatever they can today to help offset what has to be borrowed in the future."
College Savings Iowa lets anyone parents, grandparents, friends and relatives invest for college on behalf of a child. Investors do not need to be a state resident and can withdraw their investment tax-free to pay for qualified higher education expenses including tuition, books, supplies and room and board at any eligible college, university, community college or accredited technical training school in the United States or abroad.** For more information about College Savings Iowa, call 888-672-9116 or visit www.collegesavingsiowa.com.
* If withdrawals are not qualified, the deductions must be added back to Iowa taxable income.
** Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax on the earnings, as well as state income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.