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| FOR IMMEDIATE RELEASE |
| State Rep. John P. Sabatina, Jr. |
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Sabatina: Save for college, save on taxes
HARRISBURG, Dec. 23 – State Rep. John Sabatina, D-Phila., is urging Philadelphians to consider opening or contributing to a Pennsylvania 529 college savings account before Dec. 31 to help reduce their 2011 Pennsylvania state taxable income – one of the many generous tax benefits college savers receive via the PA 529 College Savings Program.
“It is never too early or too late to start saving for college,” Sabatina said. “I encourage people to start before December 31 to reap valuable tax benefits.”
Taxpayers can deduct up to $13,000 per beneficiary in PA 529 contributions from Pennsylvania taxable income on their state income tax returns for 2011. Married couples filing jointly can deduct up to $26,000 per beneficiary if each spouse has taxable income of at least the amount deducted. Additionally, family and friends can contribute up to $65,000 in a single year ($130,000 for a married couple filing jointly) for each beneficiary without incurring federal gift tax consequences (assumes no other gifts in the next four years).
Earnings in a 529 plan are not subject to yearly taxes as they grow, and when used for qualified higher education expenses, earnings are tax-exempt when withdrawn.
To encourage more families to start saving for college in a tax-advantaged way, the PA 529 College Savings Program is offering free enrollment – a $50 savings – for all new PA 529 Guaranteed Savings Plan accounts opened before Dec. 31 at www.PA529.com. Use code “StartToday” when prompted. There is no enrollment fee for the PA 529 Investment Plan.
Sabatina said the primary difference between the two plans is the way savings grow. Growth in the PA 529 Guaranteed Savings Plan is based on tuition inflation. For example, if you save enough for a semester at one of the Pennsylvania’s State System of Higher Education universities today, you will have enough for a semester there in the future – no matter when or how much tuition has gone up in the meantime. Returns in the PA 529 Investment Plan are based on financial market performance. The PA 529 IP features low fees and more than a dozen conservative and aggressive investment options from Vanguard, one of the nation’s largest financial services companies.
To open or contribute to an account, visit www.PA529.com, or call 1-800-440-4000.
“Before investing in either plan, I encourage people to carefully read each plan’s disclosure statement to make the best financial decision for their circumstances,” Sabatina said.
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