Receive a 529 Tax Deduction
Over time, a tax-advantaged 529 plan like Bright Start may outperform similar investments in a taxed savings account. As you can see from the chart below, it would take some pretty impressive returns to outdo the tax-free growth of a 529 plan.
When funds are put into a savings account, they are taxed. Over time, the amount paid in taxes on those funds can add up to a substantial amount.
But when you save for college with a 529 plan, your funds can be put directly into the account without being taxed, and later taken out tax-free when they are used for qualified expenses. As you can see in the chart below, the amount saved by not paying taxes on your college savings funds can grow to a substantial amount over time.
This hypothetical illustration assumes an initial investment of $10,000 and a 5 percent annual rate of return. The taxable account assumes a 28 percent federal and 5 percent state tax rate. The illustration does not represent the performance of any specific account or investment and does not reflect any plan fees or charges that may apply. If such fees or charges were taken into account, returns would have been lower.