What is a 529 Savings Plan?
- 529 plan is a type of tax-free investment account you can use to save for college expenses and starting January 1, 2018, for K-12 tuition.
Who can open a 529 plan account?
- Parents, grandparents, other relatives, friends, etc. The account owner chooses a beneficiary.
How do I set up an Iowa 529 Plan?
Click here to enroll.
How much can I contribute to an Iowa 529 Savings Plan and get an Iowa tax deduction?
- For 2025, each account holder can deduct up to $5,800. It must be an Iowa 529 plan to get the deduction.
- Example: Husband & wife have 3 kids
- Husband could have 3 accounts and could contribute and deduct up to $5,800 to each account.
- Wife could have 3 accounts and could contribute and deduct up to $5,800 to each account.
When can I contribute?
- Contributions can be made up to the Iowa tax filing deadline, which is generally April 30.
- Account owners can set up recurring contributions with as little as $25 for each contribution.
How do I take money out of this account?
- Log into the owner's account and select "make withdrawal"
- It takes about 10 business days to get money from a 529 plan to the owner's bank account or school.
How much can I take out of this account tax-free each year for K-12 tuition?
- $10,000 per year per student can be withdrawn free of tax for students K-12.
- Beneficiary must attend an accredited elementary or secondary school in the state of Iowa.
How much would I save on my tax return?
- No deduction on federal tax return, but earnings grow federal tax-free.
- Deduction on Iowa tax return would save based on the tax bracket the account owner is in (up to 6%). Example: $5,800 x 6% = $348 tax savings.
Can I claim the $500 tuition & textbook credit using funds withdrawn tax-free from a 529 plan?
- Yes, per guidance released by the Iowa Department of Revenue.
Iowa Alliance for Choice in Education provides further information.
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