Every state writes their own rules for 529 college savings accounts. In the State of Iowa, the contribution deadline used to match up with the end of the calendar year. That’s changed effective for tax years beginning on or after January 1, 2015. Iowa taxpayers may now elect to treat contributions to their College Savings Iowa account made up through the deadline (excluding extensions) for filing an individual Iowa state income tax return (generally April 30).
College savers like the 529 plan because it offers certain tax benefits. First, similar to how a ROTH IRA works, the 529 account’s owner does not pay taxes on the investments themselves while they stay in the account. Secondly, Iowa residents depositing into an College Savings Iowa are eligible for an Iowa state income tax deduction.
Lastly, withdrawals from the 529 account are tax free provided they are being used for qualified expenses. To learn more about the College Savings Iowa account, visit College Savings Iowa.
Note: Valiant Wealth does not give individual tax advice. The applicable federal, state, and local tax rules are complex; some of the rules are at present uncertain and their application to any particular person may vary according to the facts and circumstances specific to that person. Consult a qualified tax advisor to see how these program will impact you.