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Plan benefits.
Tax Advantages:
The numerous tax benefits are one of the reasons why saving for college with the College Savings Plan of Nebraska makes sense. Contributions to the Plan qualify the account owner for a Nebraska State income tax deduction of up to $5,000 ($2,500 if married filing separately). Additionally, money in the account grows tax-deferred. This feature allows your investment to grow faster because the growth of your money is not stunted by taxes each year. Qualified withdrawals for higher education expenses are completely federally income-tax free and Nebraska State income tax-free. For estate planning purposes, the College Savings Plan of Nebraska is an excellent way to remove money from your estate while helping a loved one afford a college education.
Affordability:
The College Savings Plan of Nebraska is designed to meet the needs of every family and every budget. There is no minimum annual contribution required. You can contribute a maximum of $12,000 per year per beneficiary without incurring federal gift taxes, and 529 plans are the only way to contribute as much as $60,000* in one year without federal gift taxes because the $60,000** counts as 5 years gift money. You may contribute as much as $360,000** over the life of the account.
Contributing to the plan is also simple and easy. You can contribute by check, an automatic investment plan or automatic payroll deduction (if your employer provides this service).
Flexibility:
There is maximum account flexibility with the College Savings Plan of Nebraska. Withdrawals from your account can be used at eligible schools nationwide and some foreign schools. The Nebraska plan covers almost all expenses related to college such as tuition, fees, reasonable room and board (if enrolled at least 1/2 time), books, equipment and supplies. If the child decides not to attend college or does not use all the funds, the account can be rolled over to another member
of their family.
If account owners need to withdraw some of their funds for non-college related expenses, the earnings portion of the withdrawal is taxed at their normal tax rate and a 10% federal tax penalty applies. If the beneficiary receives a scholarship, the account owner may withdraw funds up to the amount of the scholarship without paying the 10% federal tax penalty on earnings. The penalty is also waived if the beneficiary passes away, becomes disabled, or attends a U.S. Military Academy.
Options:
A unique advantage to the Nebraska program is its diversified investment menu and use of well-known mutual fund families. Multiple investment options gives you the freedom to choose the plan that's right for you. Each option is designed to help you meet the increasing cost of a higher education. For more detailed information, please view the Investment page.
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