Tax Benefits – Achieve Montana

Features and Benefits

Features and Benefits

Tax-Deferred Earnings

Tax-Deferred Earnings:

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

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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 Tax Benefits

Gift and Estate Tax Benefits:

Your contributions also qualify for the federal $15,000 ($30,000 if married, making a proper election) annual gift exclusion. Reduce your personal taxable estate by making five years’ worth of gifts to a beneficiary (up to $75,000; $150,000 if married, making a proper election) in one lump sum.2

Special Tax Benefits for Montana Taxpayers

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, or withdrawals used to pay elementary or secondary school tuition, registered apprenticeship program expenses, qualified education loan repayments, or a withdrawal from an account that was opened within three years 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.