529 plans can be a smart way to balance today's budget with tomorrow's tuition bills. Their special features, from low fees to tax-advantaged investing, can help keep more of your money working for you and your child.

Here's why plans like HI529 could be right for you:

HI529 accounts are easy to open.

• Open an account with as little as $15.
• Anyone can open or contribute to an account, no matter where you live or how much you earn.
• Beneficiaries can be any age and live in any state.

HI529s are tax smart.

• Earnings can grow tax deferred from federal and state income tax.
• Withdrawals for qualified expenses are tax-free.¹
• Contribute up to $18,000 per beneficiary each year (or $36,000 for married couples filing jointly) without incurring federal gift-tax consequences, OR
• Make a $90,000 ($180,000 married filing jointly) contribution in a single year and treat it as though it were made over five years for tax purposes.²

Unlike taxable college savings vehicles, 529 contributions can grow free of federal and state taxes.¹ The difference can be significant, as shown in the hypothetical chart below:

If you open a 529 account with an initial investment of $2,500 and contributed $100 every month for 18 years, there could be over $6,300 more for a qualified withdrawal than the same investment in a taxable account.¹

Assumptions: $2,500 initial investment with subsequent monthly investments of $100 for a period of 18 years; annual rate of return on investment of 5% and no funds withdrawn during the time period specified; and taxpayer is in the 30% federal income tax bracket for all options at the time of contributions and distribution. This hypothetical is for illustrative purposes only. It does not reflect an actual investment in any particular 529 plan or any taxes payable upon distribution.

HI529 accounts offer lots of low-cost investment options.

Choose from:

• an Age-Based Option that automatically adjusts to more conservative investments as your child ages.
• Individual Portfolios tailored to your specific risk tolerance and time horizon.

HI529 savings are flexible.

• Use HI529 money at any K-12 public, private or religious school and at any eligible educational institution anywhere in the country and abroad, not just in Hawaii, including 2- or 4-year colleges or universities, vocational/technical schools, career retraining schools, dual credit courses and graduate schools³
• Qualified expenses include:
  • ­K-12: tuition only; withdrawals are limited to tuition payments up to $10,000 per year, per student⁴; withdrawals are also free from federal income tax, however, are considered a Hawaii non-qualified withdrawal so are subject to Hawaii state income tax.⁵
  • Higher education: tuition, certain room and board costs, mandatory fees, books and supplies, and computer software and internet access

 

 

¹Earnings 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. The availability of tax or other benefits may be contingent on meeting other requirements.

²In the event you do not survive the five-year period, a pro-rated amount will revert back to your taxable estate.

³An eligible educational institution is one that is eligible for federal financial aid programs.

⁴The $10,000 limit is in the aggregate across all 529 Plans per student.

⁵Since different states have different tax provisions, if you or your beneficiary, as applicable, are not a Hawaii taxpayer, the state(s) where you pay income tax may differ in its state income tax treatment of K-12 tuition expenses. You should consult your own state’s tax laws or your tax advisor for more information on your state’s taxation of withdrawals for K-12 tuition expenses.