Benefits for Arizona State Taxpayers

Take advantage of the Arizona tax deduction based on contributions to the Bank Plan! Arizona taxpayers are now eligible for a new incentive effective September 29, 2021, pursuant to Arizona Laws 2021, Chapter 395, Sec. 1.43-1022.

• Married couples can subtract up to $4,000 per beneficiary when filing jointly.
• Single individuals or heads of household may subtract up to $2,000 per beneficiary.

Benefits for Montana State Taxpayers

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. Funds are subject to recapture if withdrawn from the Program within three years.

Federal 529 Plan Tax Benefits for All U.S. Residents

• Earnings grow tax-deferred.²
• Distributions to pay qualified education expenses are tax-free.
• Any U.S. Citizen or Resident Alien can participate and there are no income limitations.
• Participants also benefit through tax-free gifting. Contributors can make annual gifts of up to $18,000 ($36,000 for married couples making the proper election) to a beneficiary for all accounts without incurring federal gift tax. For contributions over the limit, you may treat the money (up to $90,000 single and $180,000 for married couples making the proper election) as having been made routinely over a five-year period.³
• U.S. Savings Bond owners generally may redeem bonds purchased after 1989 tax-free and contribute the proceeds in a 529 plan. IRS restrictions apply. Please see the IRS Tax Benefits for Education for current income limitations or call 888-913-2885 for more information.
• If the beneficiary does not attend a post-secondary institution, the account owner can change the beneficiary, penalty free. To avoid taxes and penalties, the new beneficiary must be a member of the family of the original beneficiary. Certain restrictions apply. Please consult your tax advisor and the Disclosure Statement [link to disclosure statement] for more detailed information regarding a change in beneficiary.

1. This credit may be subject to recapture from the account owner (not the contributor) in certain circumstances, such as a rollover to another state’s qualified tuition program or a non-qualified withdrawal. The credit does not apply to rollovers from another state’s qualified tuition program. See the Disclosure Statement [link to disclosure statement] for additional details.
2. Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes and early withdrawal penalties. The availability of tax or other benefits may be contingent on meeting other requirements.
3. In the event the contributor does not survive the five-year period, a pro-rated amount will revert back to the contributor’s taxable estate.

NexBank and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.