Foster Group

College Savings Iowa – What’s the Maximum Deductible Limit?  Also, Some Changes are Coming!

For 2011, you may deduct from your Adjusted Gross Income a maximum contribution to College Savings Iowa of $2,865 per beneficiary on your State of Iowa income tax return.  If you’re married, your spouse may contribute that amount as well.  There’s still time left to contribute.  Make sure your check is postmarked or your automatic deposit is posted no later than December 31, 2011.

If you’re planning for 2012, the maximum allowable deduction will be $2,975 per beneficiary. That’s right; 2 parents, 2 kids, 4 accounts - a total of $11,900 of allowable deductions!  Not to mention a great way to accumulate tax-deferred growth for college.  Remember, this is for contributions made January 1, 2012 or later.

Oh, and you might be interested to know that College Savings Iowa is making some changes to available investment options which may affect your existing accounts.  If your accounts are invested in the age-based tracks, their objective will now be included in their name to give you a better idea of the investment style of each track.

More significant to note: the age-based tracks will increase their international stock exposure from 20% to 30% of the stock portion of each portfolio.  While some of the underlying holdings will change as well, they’ll continue to have well-diversified domestic and international stock and bond holdings, all managed by Vanguard Funds.  Fund expenses are not expected to increase.  If you have existing accounts invested in an age-based track, you won’t need to take any action; the changes will happen automatically.  If you’ve created a custom portfolio from the individual funds, you might consider the new international fund option, Total International Stock Index Portfolio, to see if it’s suitable as part of your allocation.

Complete details can be found at:

https://a248.e.akamai.net/f/248/21630/7d/im.uprinv.com/rc/sr2/ia/newsletter_supplement.pdf

Below is a summary of name and allocation changes for the track options: