Deadline to Benefit from State Tax Deduction on START Deposits is December 29

Treasurer Kennedy Says 529 Plan is Good Tax Break and Smart Investment

BATON ROUGE, LA – Louisiana residents making deposits into the START 529 college saving plan have until noon on Friday, December 29, 2006, to benefit from deductions on their 2006 state tax returns, according to State Treasurer John Kennedy.

“START account owners often think they can make deposits up until April 15 and still benefit this tax year, but that’s not the case,” said Treasurer Kennedy.  “If you want a tax break this year, it is important to get your START deposits in by December 29.”

Up to $2,400 in deposits made during 2006, or $4,800 per account if the owner files a joint tax return, can be deducted from income reported on a 2006 Louisiana Tax Return.  If an account owner does not make $2,400 in deposits in one year, he or she can carry forward the unused portion to subsequent years.  The tax break also applies to business owners who open START accounts for their employees.

In addition to taking a state tax deduction, START account owners do not pay state or federal taxes when they withdraw money for educational expenses.  Interest earned on START deposits is also exempt from federal and state taxes when used to pay for higher education expenses.

“START is much more than a good tax break, however. It’s also a smart investment, and we have the numbers to prove it,” said Treasurer Kennedy.  “The program has experienced tremendous growth over the past few years. In 2001, we had a little more than 4,300 accounts and around $7.6 million in total assets.  Today, we have more than 22,500 accounts and $125 million in total assets.  One of the biggest draws of the program in addition to its tax incentives is that the state matches a portion of deposits depending on income.”

Deposits made into a qualifying START account by noon on December 29 will be eligible for 2 percent to 14 percent in state matches and will be credited to accounts effective December 31, 2006.  For more information about START, visit www.osfa.state.la.us.

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