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Article: State college savings plans offer tax breaks.(Personal Finance)(qualified state tuition programs)
- Article from:
- Healthcare Financial Management
- Article date:
- November 1, 1999
- Author:
CopyrightCOPYRIGHT 1999 Healthcare Financial Management Association. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Qualified state tuition programs (QSTPs) enable participants to contribute to an account established to pay future college expenses for a beneficiary. QSTPs allow participants to invest and take advantage of recently enacted Federal and state tax breaks.
Forty states and the District of Columbia offer QSTPs and are competing for QSTP program dollars. All Federal tax on investment earnings is deferred until the money is withdrawn; then the earnings are taxed at the beneficiary's rate (15 percent, up to $25,750 of income in 1999).
For example, an individual can establish an account in New Jersey, New York, or Massachusetts for only $25 by agreeing to make ...