(Saving for Education).
4. What are the limits of contribution for individuals out to 2010? .
Each state set contribution limits for 529 plans. For the scope of this paper, we will discuss 529 plans for the states of Missouri, Illinois, Iowa, and Arkansas. The information used to provide the summary below was obtained from (insert source here).
Missouri.
* $235,000.00 maximum lifetime contribution limit per beneficiary.
* Residency not required. .
* Minimum contribution of $25.00, $15.00 if made via payroll deduction. .
Illinois.
* $235,000.00 maximum lifetime contribution limit per beneficiary.
* Minimum 12 month residency required. .
* Minimum initial contribution of $25.00, $15.00 for subsequent contributions, and no minimums for payroll deductions. .
Iowa.
* $239,000.00 maximum lifetime contribution limit per beneficiary.
* Residency not required, however, the beneficiary must be under the age of 18 at the time the account is established.
* Minimum contribution of $50.00 per year.
Arkansas.
* $245,000.00 maximum lifetime contribution limit per beneficiary.
* Residency is required.
* Minimum initial contribution of $250.00 for residents, $1,000.00 for non-residents, and subsequent contributions of $50.00 .
5. What are the limits of contributions for employers out to 2010?.
Employer contributions do not apply to 529 plans.
.
6. When are the funds available without penalty? Describe all available .
withdrawal methods which avoid any early withdrawal penalties.
Qualified withdrawals include payment of tuition fees, room and board, books, supplies, equipment required for enrollment (Doesn t the beneficiary also have to be under age 30 for the distribution to be classified as a qualified one?). Federal law imposes a 10% penalty on earnings for non-qualified distributions beginning 2002. This means you will get back 100% of your principal and 90% of your earnings. In addition, non-qualified withdrawals are subject to federal income tax.