MOST 529 tax benefits
With MOST 529, you can save on taxes while you save for education.
Pay no income tax on earnings
Your 529 account money grows deferred from federal and state income taxes.
Make tax-free withdrawals
You won't have to pay federal or Missouri state income taxes on the money you withdraw to pay for qualified expenses.*
Save more with state income tax deductions
If you're the account owner and you live in Missouri, you can deduct up to $8,000 ($16,000 if you're married filing jointly) of your MOST 529 Plan contributions when you file your state income taxes. That adds up to $831 a year in tax savings (max savings calculated based on $16,000 max contribution, married filing jointly, and $56,855 income).**
Enjoy a federal gift tax incentive
You can contribute up to $15,000 per year ($30,000 if married filing jointly) without triggering federal gift tax.
You can also contribute a larger lump sum of up to $75,000 per beneficiary ($150,000 if you're married filing jointly) and then treat it as though you contributed that amount over a five-year period.***
Keep these points in mind
Your state's plan may offer tax benefits
If you don't qualify for state tax deductions on your MOST 529 account contributions (see "Save more with state income tax deductions" above), think about whether your home state offers a 529 plan. It might have tax advantages or other benefits that aren't available through this plan. Other state benefits may include financial aid, scholarship funds, and protection from creditors.
There are penalties for nonqualified withdrawals
If you make a nonqualified withdrawal, you may have to pay state income tax on the portion of your contributions that you originally deducted on your tax return. Any earnings you withdraw may also be subject to federal, state, and local income taxes and a 10% federal penalty tax.
Missouri taxpayers can use MOST 529 assets to pay K–12 tuition
As of 2018, for federal tax benefit purposes, qualified expenses also include tuition of up to $10,000 per student per year in connection with enrollment or attendance at an elementary or secondary public, private, or religious school (K–12). In addition, Missouri taxpayers can use MOST 529 assets to pay for expenses for tuition in connection with enrollment or attendance for K–12 with no state tax consequences. State tax treatment of K–12 withdrawals is determined by the state where the taxpayer files state income tax. If you're not a Missouri taxpayer, please consult with a tax advisor.
529 plans can be rolled over to ABLE plans
Federal legislation now allows rollovers from 529 plans to Achieving a Better Life Experience (ABLE) accounts without incurring federal taxes up to the annual ABLE contribution limit. Missouri statute does currently allow for rollovers of MOST 529 assets to ABLE accounts without Missouri state tax consequences. We suggest MOST 529 account owners who are residents of other states consult with a tax advisor about their state laws.