An excerpt about the WI 529 Plan from Investment Management at Voya.com
529 plans like Tomorrow’s Scholar offer multiple tax incentives. Although contributions are not deductible on your federal tax return, earnings grow tax-free, withdrawals are tax-exempt, and generous contributions are free from estate tax accounting—as long as the account is used for educational expenses.
The projected values assume an initial lump sum of $10,000 is invested and $150 is invested each month thereafter for 18 years at a hypothetical compound annual growth rate of 7%, accrued monthly. At a 28% tax bracket, after 18 years, the investment would grow to $77,172 in a taxable account compared with $99,584 in a tax-deferred account. No consideration is given for state or local taxes.
The amount of an outgoing rollover made to another state’s 529 Plan on or after June 1, 2014, however, will be added to Wisconsin income and taxed to the extent that the amount was previously claimed as a reduction. Effective June 1, 2014, non-qualified withdrawals of contributions made after 2013 will be added to Wisconsin income and taxed to the extent the receipt of such amounts results in the additional 10% tax for federal tax purposes.
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