- Qualified U.S. Savings Bonds (Series EE Bond issued after 1989 and all Series I Bonds) are government debt securities issued by the U.S. Treasury Department and are backed by the full faith and credit of the United States government. Interest paid on these bonds is exempt from state and local income taxes.
- Proceeds from the redemption of Qualified U.S. Savings Bonds may be transferred into Future Scholar without adverse tax consequences provided certain conditions are met:
- The bond must be in the taxpayer's name.
- The bond is a series EE purchased on or after January 1, 1990 or is a series I bond.
- Proceeds (including principal and interest) must be placed into the Future Scholar account in the year redeemed.
- The owner must be at least 24 years old before the bond's issue date.
- The beneficiary named on the Future Scholar account must be a dependent of the bondholder and claimed as such on bondholders tax filing.
- Subject to the below income limitations:
Modified Adjusted Gross Income (MAGI)
| |
100% interest exclusion |
Exclusion phase out range |
| Single taxpayer |
Up to $63,100 |
$63,100 - $78,100 |
| Joint filers and surviving spouses |
Up to $94,700 |
$94,700 - $124,700 |
- The proceeds check from the transfer of Qualified U.S. Savings Bonds must be made payable to: Future Scholar 529 College Savings Plan FBO [name of Designated Beneficiary] and must accompanied by appropriate documentation of the principal and earnings portion of the contribution (see below).
Breakdown of Contributions and Earnings and Appropriate documentation: The Account Owner must provide an account statement or Form 1099-INT issued by the financial institution that redeemed the bond that shows the interest (earnings) from the redemption of the bond. If this documentation is not provided, the entire amount of the contribution will be treated as earnings.
SPECIAL NOTE: Any time a savings bond is redeemed, the bondholder will receive a tax form 1099-INT showing the earned interest. When a qualified bond is used to either pay for higher education expenses or to fund a 529 Plan, and the above requirements are met, then the interest is federally tax exempt. File tax Form 8815 for the same tax year as the 1099-INT to claim exemption.
Please consider the investment objectives, risks, charges and expenses carefully before investing in the Future Scholar 529 College Savings Plan. Contact your financial advisor or Columbia Management for a Program Description, which contains this and other important information. Read it carefully before investing. You should consider, before investing, whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Columbia Management Investment Distributors, Inc., distributor and underwriter.
This information does not constitute tax or legal advice. Neither the State Treasurer, Columbia Management Investment Advisers, LLC, nor its affiliates, provide tax or legal advice. Please consult your tax advisor before making tax-related decisions.
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