The 529 plan of Connecticut is another of those few 529 state plans that are good for both instate as well as outstate residents. There is only one 529 plan in the state of Connecticut, and it is known as the Connecticut Higher Education Trust Savings Plan (CHET in short). As the name suggests, it is a savings plan. The following are some of the interesting features of the CT 529 plan:-
1. All contributions made on the Connecticut state 529 plan are partially deductible on tax. If a person is filing singly, then an amount of $5,000 can be shown for deduction, but if a married couple files jointly, then an amount of $10,000 can be shown for deduction.
2. Another interesting feature is that both qualified withdrawals from the state plan and qualified withdrawals from the plans of other states are free from tax. This is an advantage over most other 529 state plans, who will not allow tax-free withdrawals from plans of other states.
3. The CT 529 plan is open to residents as well as nonresidents of the state. There is a maximum contribution limit of $300,000, which is not as high as that of some other states like that of Pennsylvania. (the maximum contribution in the PA 529 plan is $344,000).
4. The minimum amount for both instate and outstate residents to open an account with the CT 529 plan is $25, and it needs an additional purchase of the same amount.
5. There is an additional automatic investment plan that you can opt for with the CT 529 plan, which can be opened with a minimum of $15 and an additional purchase of the same amount. An annual contribution can be made with this automatic investment plan.
6. One of the best features of the CT 529 plan is that it is free of any enrollment fees and annual maintenance fees, which makes the price of this plan quite low. There is a very small program management fee of $0.39 to $0.56. There are no fees for canceling the plans, changing the beneficiary of changing the account owner. Therefore, the plan is a very economical plan.
7. Both qualified and nonqualified withdrawals can be made. If the withdrawal is made for a qualified purpose, then there are no penalties, but for nonqualified withdrawals, there is a penalty of 10%.
In conclusion, the CT 529 plan is a very economical plan for people who want to save on tax, especially couples because of the high tax deduction that can be shown. The only limitation of this plan, with the factors considered, is the comparatively low limit on the maximum contributions that can be made to the plan.