I opened a college savings plan sponsored by a different state than my own. Will I get that state's tax benefits?
![]() Answer:No. Often, state income tax benefits are provided to a state's residents who invest in their state's 529 college savings plan. These benefits could take the form of a state income tax deduction for contributions, tax-free treatment of qualified withdrawals, or a waiver of brokers' fees. You should look to the tax laws of your own state to determine the income tax treatment of deductions and withdrawals from a college savings plan. In general, you should expect that you won't be required to pay income taxes to another state simply because you opened an account in that state's 529 plan. You'll probably be taxed in your state of residency on the earnings in your 529 plan (no matter where situated) unless your state grants a specific exemption. |