ATLANTA - Georgia will begin its tax-advantage savings plan for higher education Wednesday. <br>
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For parents Stacey and Jon Shoats, it's not a moment too soon. <br>
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``We're still paying for it,'' 36-year-old Stacey Shoats said, referring to student loan debt accumulated from college. The Shoats plan to open a 529 account for their 7-year-old daughter. <br>
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The most recent General Assembly approved Gov. Roy Barnes' legislation to create a savings plan in which parents can invest up to $8,000 a year in a college education fund for a child without paying taxes on any earnings. <br>
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Parents and guardians who contribute to the fund also can get a $2,000 deduction on their state taxes. <br>
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The 529 savings plan is named for a section of federal tax law. <br>
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Investment gains are not taxed, nor are withdrawals when the money is used for education expenses. The state program will have five investment options. <br>
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Georgia is one of the last states to start such a savings plan. Its version was delayed until the General Assembly eliminated an $8,000 annual contribution limit on an earlier plan. <br>
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There are no limits on who can open and account or who can be a beneficiary. Contributions can continue until an account has $235,000 in it. <br>
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Money in a 529 account can be used for undergraduate and graduate school, and at schools inside and outside the state. Expenses for trade, technical and vocational schools are covered as well as college. <br>
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If money in a 529 plan is withdrawn but not used for specified education purposes, the Internal Revenue Service will impose a 10 percent penalty and also tax earnings withdrawn from the account. <br>
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Georgia will permit 529 savings to be used at state schools or those outside Georgia. <br>
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Program information will be available at 1-877-424-4377, or online at www.gacollegesavings.com.
