Montana taxpayers are entitled to a $3,000 deduction to gross income per taxpayer,
or $6,000 for those married, filing jointly based on contributions to the Montana
Family Education Savings Program Bank Plan*.
Additional tax benefits include:
- Earnings grow tax-free.
- Distributions to pay qualified education expenses are tax-free.
- Anyone can participate and there are no income limitations.
- Participants also benefit through tax-free gifting. Account owners can make
annual gifts of up to $13,000 single and $26,000 joint to a designated beneficiary
for all accounts without incurring federal gift tax. For contributions over the
limit, you may treat the money (up to $65,000 single and $130,000 joint) as having
been made ratably over a five-year period.
- At any time you may prepay as much college and graduate school as you'd
like up to $340,000 - the current maximum contribution limit.
- Assets in a 529 account are not treated as part of the federal taxable estate
of the account owner who is not a designated beneficiary.
- U.S. Savings Bond owners generally may redeem bonds purchased after 1989
tax-free and deposit the proceeds in a 529 plan. IRS restrictions apply. Please see
the IRS Tax Benefits for Education for current income limitations
or call 800-888-2723 for more information.
- If the child does not go to college you can change the beneficiary penalty
free. To avoid taxes and penalties, your new beneficiary must be a member of the family of your original beneficiary. Certain restrictions apply. Please consult your tax advisor and the MFESP Bank Plan Disclosure for more detailed information regarding a change in beneficiary.
*Subject to recapture if the funds are withdrawn from the program within three