Savings For College
You can save for the college education of a family member and receive tax benefits. The two plans that allow for the savings are 529 Plans and Coverdell Education Savings Accounts. Here’s how they work:

529 Plans:

Contributions
Accounts may be established for any beneficiary (child, grandchild, niece, and nephew, even yourself) Account grows tax free – just like an IRA. Money taken out for education is not subject to income tax. You receive no current year Federal tax benefit for contributing to the account. You may receive a current year state tax benefit for contributing to a state sponsored plan, in a state where you pay income tax Contribution limits vary based upon the state plan you choose. To receive current year tax deduction the maximum contribution are: Kansas $3,000 per beneficiary($6,000 if married filing joint) per year Missouri $8,000 per beneficiary per year. You have very limited flexibility in determining how your contributions are invested.

Distributions
Money can be taken out for secondary or technical education only. Qualified expenses for college include tuition, fees, books, supplies and equipment, as well as room and board. Money taken out and not used for education is subject to 10%penalty. For more information:

www.savingforcollege.com
Kansas – www.learningquestsavings.com
Missouri – www.missourimost.com

Coverdell Education Savings Account:

Contributions
This replaced the Education IRA Accounts may be established for any beneficiary under the age of 30. Account grows tax free – just like an IRA. Money taken out for education is not subject to income tax You receive no current year tax benefit for contributing to the account. Account can be established with virtually any financial institution. For 2014 contribution is limited to $2,000 per beneficiary. You have complete flexibility in determining how your contributions are invested.

Distributions
Money can be taken out for private, public or religious elementary or secondary education. Qualified expenses for elementary or secondary education include tuition, books, supplies, and equipment Money can be taken out for college or technical education. Qualified expenses for college include tuition, fees, books,supplies and equipment, as well as room and board. Money taken out and not used for education is subject to 10% penalty. Distributions must be made by age 30 of the beneficiary. For more information: www.savingforcollege.com

IRS Circular 230 Notice: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.