Rolling an out-of-state 529 plan into Bright Directions is an easy process that can provide significant benefits. As you look into the potential for a rollover, be sure to review the considerations and benefits with your tax and financial advisors.
Three Great Benefits of Rolling Over to Bright Directions:
- The State of Illinois offers an income tax deduction of up to $10,000 ($20,000 if filing jointly) for contributions to Bright Directions. The Illinois Administrative Code provides that in the case of a rollover from a non-Illinois qualified tuition program, the amount of the rollover that is treated as a return of the original contribution to the prior qualified tuition program (but not the earnings portion of the rollover) is eligible for the deduction for Illinois individual income tax purposes.
- The program offers access to 24 quality fund families.
- You can invest in Fee Structure A with no front-end load. If you previously paid a front-end sales charge, contributions that constitute a qualified rollover distribution from another 529-qualified tuition program or a Coverdell Education Savings Account may be made to accounts under Fee Structure A without the imposition of an initial sales charge. This initial sales charge waiver is only available through certain broker-dealers. Check with your financial advisor to see if you are eligible before initiating a rollover.
Three Easy Steps to Completing a Rollover:
- Review your existing out-of-state 529 with your tax and financial advisors. Consider any surrender charges or penalties the out-of-state 529 plan may impose.
- If you don’t have a Bright Directions account, contact your financial advisor to establish one.
- Complete the Rollover Form with your financial advisor.
a. Obtain a Medallion Signature Guarantee on the form.
b. Attach a copy of the latest statement from your out-of-state 529 plan.
c. Mail the form to Bright Directions, and let us handle the rest.