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Tax Benefits

Tax-Deferred Earnings

Your account earnings grow deferred from both federal and state taxes.

Federal and State Tax-Free Qualified Withdrawals:

When your child is ready for college, you can withdraw the money from your Achieve Montana account free from federal and Montana state income taxes if the money is used to pay for qualified higher education expenses.1

Gift and Estate Tax Benefits:

Individuals can invest up to $18,000 ($36,000 for married couples making a proper election) per beneficiary without incurring any federal gift-tax consequences provided you don’t make additional gifts to that beneficiary in the same year. In addition, “accelerated gifting” lets you contribute up to $90,000 per beneficiary in a single year ($180,000 for married couples making a proper election) and take advantage of five years’ worth of tax-free gifts at one time provided you don’t make additional gifts to that beneficiary for five years (Contributions are considered completed gifts to the beneficiary and are removed from your estate², but you, as the account owner, retain control.) For more information, consult your tax advisor or estate-planning attorney.

Special Tax Benefits for Montana Taxpayers:

Contributions you make to Achieve Montana may be eligible as a yearly deduction of up to $3,000 per taxpayer per year ($6,000 for those married, filing jointly) from adjusted gross income in computing Montana state income tax. To be eligible, the contribution must be made to your account, an account owned by your spouse, on an account owned by your child or stepchild if your child or stepchild is a Montana resident.3
1 Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements. A withdrawal used to pay tuition at a public, private, or religious elementary or secondary school is not subject to federal taxation.
2 In the event the contributor does not survive the five-year period, a pro-rated amount will revert back to the contributor’s taxable estate.
3 Contributions may be subject to recapture in certain circumstances, such as a federal non-qualified withdrawal, rollovers to another state’s 529 plan, a Roth IRA rollover, or a withdrawal from an account that was opened within one year prior to the date of the withdrawal, as described in the Program Description. (Recaptured Withdrawal). If the account owner is no longer a Montana resident at the time of a Recaptured Withdrawal, we may withhold the potential recapture tax from the Recaptured Withdrawal.