Tax Information for Wisconsin Account Owners

• 2024 Tax Deductible Amounts: $5,000 per beneficiary for single filers or married filing joint, OR $2,500 per beneficiary for married filing separate.
• 2025 Tax Deductible Amounts: $5,130 per beneficiary for single filers or married filing joint, OR $2,560 per beneficiary for married filing separate.
  

• Carry Forward: Contributions in excess of the maximum annual tax-deductible amount may be carried forward and applied in subsequent tax years, subject to annual limitations. Carry-over of contributions in excess of the maximum annual tax deduction threshold also must be added back to Wisconsin income if the carry-over amount was withdrawn from the account within 365 days of being carried over.
  

• 365-Day Rule: Withdrawals taken within 365 of being contributed to an account must be added to Wisconsin income to the extent the contribution was previously deducted from Wisconsin income. Any amount withdrawn within 365 days of being contributed to the account must be added back to income or reduce available carry-over.

• The Wisconsin 529 College Savings Program requires the use of a “first in, first out” method of accounting.
  Examples: (1) Pat opens an account with $2,000 in December 2023 and deducts that amount on their 2023 tax return. In August 2024, $1,000 is withdrawn for qualified education expenses. Since the $1,000 had not been in the account for 365 days, $1,000 must be added back as taxable income on the following year's tax return. (2) Pat opens an account with $1,000 in August 2023, and then contributes $2,000 in December of 2023. In September 2024, $1,000 is withdrawn for qualified education expenses. In this case, the $1,000 withdrawal is considered as taken from the older money, outside of the 365-day window, and does not need to be added back as taxable income.

• Distributions from an account to pay for qualified higher education expenses should be made within the same calendar year expenses were incurred.

Schedule CS Tax Form: Contributions and distributions from a Wisconsin 529 plan (for qualified expenses and non-qualified expenses) are reported on the State of Wisconsin DOR Schedule CS, and attached to Form 1, the state income tax return. The schedule and instructions are at the Wisconsin Department of Revenue website.

Form 1099-Q: Annually, the Plan will issue a Form 1099-Q if any withdrawal is made from an account in the previous calendar year. Form 1099-Q shows the contributions and earnings portion (if any) for withdrawals made from your account. The Form 1099-Q recipient (which is deemed to be the Account Owner unless the withdrawal is paid to the Beneficiary or an eligible educational institution on behalf of the Beneficiary) is responsible for determining whether the earnings portion of the withdrawal is taxable, for retaining appropriate documentation to support this determination, and for appropriately reporting earnings on his/her federal and Wisconsin income tax forms.

Rollovers: Rollovers from other state's 529 plans into an Edvest 529 or Tomorrow's Scholar plan are accepted. For the 2015 and following taxable years, rollovers of principal portion (or contributions portion) may qualify for reducing your Wisconsin taxable income, including carry-forward for subsequent years; however, the portion attributed to growth is not eligible for a tax deduction on your Wisconsin income taxes. Rollovers from one Wisconsin college savings plan account into another Wisconsin college savings plan account are not eligible for the subtraction from income.

• Special Rollover to Roth IRAs from Long-Term Qualified Tuition Programs: Beginning January 1, 2024, rollovers will be permitted from a Wisconsin 529 college savings plan to a Roth IRA without incurring federal or Wisconsin income tax or penalties, subject to the following conditions:
• The Account must have been open for 15 or more years, ending with the date of the rollover;
• Contributions and associated earnings that you transfer to the Roth IRA must have been in the Account for more than 5 years, ending with the date of the rollover;
• The rollover does not exceed the lifetime maximum amount of $35,000 per designated beneficiary to be rolled over from 529 plan accounts to Roth IRAs;
  
• The rollover is into a Roth IRA maintained for the benefit of the Beneficiary on the Account; and
• The rollover is sent directly to the Roth IRA
• Note: Roth IRA income limitations are waived for 529 plan rollovers to Roth IRAs; however, a Roth IRA contribution is subject to the Roth IRA contribution limit for the taxable year applicable to the Beneficiary for all individual retirement plans maintained for the benefit of the Beneficiary.
• The IRS is expected to issue additional guidance that may impact 529 plan account rollovers to Roth IRAs, including the above referenced conditions. Account Owners and Beneficiaries should consult with a qualified tax professional before withdrawing funds for any such rollovers. Please contact your Roth IRA administrator directly to determine their ability and requirements to receive a 529 rollover (some Roth IRA administrators will not be ready to accept this type of rollover beginning January 1, 2024).
  

• Range of investment options: Choose from portfolios that range from conservative to more aggressive allocations to align with your time frame and investment objectives. Both passive (indexed) and actively managed portfolios are available, along with stable value choices. Institutional class investment fees can make college savings more affordable.

• Flexible contribution amounts and methods: An Edvest 529 account may be opened with $25, and contributions can be made through ACH from your bank account, via check, through payroll direct deposit, online through Ugift, and via rollover from another 529 plan. A Tomorrow's Scholar account may be opened with $250 per Option selected for investment. The minimum initial contribution is waived for Account Owners that make contributions through AIPs or payroll direct deposits of $25 or more per month. Once an account is opened, you control subsequent contribution amounts and the frequency of automatic or lump-sum contributions.
  

• The Wisconsin College Savings Program and its plans, Edvest 529 and Tomorrow's Scholar, conform to the federal definition of 'Qualified Higher Education Expenses' as outlined in Section 529 of the U.S. Internal Revenue Code.
  
• Funds saved in a Wisconsin 529 college savings plan can be used at any accredited public or private university, college, technical college, community college, graduate school, or professional school nationwide and many abroad, as well as toward the cost of apprenticeship programs registered and certified with the Secretary of Labor under the National Apprenticeship Act.
• Qualified higher education expenses include tuition, certain room and board expenses, fees, and the cost of books, supplies, and equipment required for the enrollment and attendance of the Beneficiary at an eligible educational institution. Computers and related technology such as internet access fees, software, or printers are also qualified when used by the beneficiary while enrolled at an eligible educational institution.
  
• Qualified higher education expenses also include:
• Certain additional enrollment and attendance costs at eligible educational institutions for any beneficiary with special needs.
• Tuition in connection with enrollment or attendance at a primary or secondary public, private or religious school (up to a maximum of $10,000 of distributions per taxable year per beneficiary from all Section 529 plans).
• Expenses for fees, books, supplies, and equipment required for the participation of a beneficiary in a certified apprenticeship.
• Amounts paid as principal or interest on any qualified education loan of either the beneficiary or a sibling of the beneficiary (up to a lifetime limit of $10,000 per individual).
• Expenses for special needs services needed by a special needs beneficiary (must be incurred in connection with enrollment or attendance at an eligible post-secondary school).

• No income or time limits: Any adult with a social security number or tax identification number may open a 529 plan and there are no income level restrictions opening an account. An account owner must be 18 years or older, but there is no age requirement for the beneficiary. Funds saved in a 529 college savings plan are not required to be used by any certain time (for example, when the Beneficiary is expected to enroll in post-secondary education).

• Federal and state tax advantages:
• Wisconsin State Income Tax Deduction: Wisconsin taxpayers are eligible for a state income tax deduction for contributions to a Wisconsin 529 college savings plan account (current amounts listed above).
• Tax-deferred growth: If the money in your account grows over time through earnings, you will not be taxed on the growth (earning portions) while the funds are in the account.
• Tax-free withdrawals for qualified educational expenses: When you use your funds to pay for qualified higher education expenses (listed above), you do not have to pay state or federal taxes on the earnings at all.

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