re: LA 529 Start Plan for HS Tuition

The actual amount of the Earnings Enhancement is calculated by multiplying the annual deposits to an account by the Earnings Enhancement rate applicable to the account category.

For account Categories I, II and III, the Earnings Enhancement rate is based on the account owner’s reported federal adjusted gross income (AGI) for the preceding taxable year (the AGI for tax year 2010 will be used to calculate Earnings Enhancements for 2011 deposits), according to the following schedule:
Reported AGI Rate Earnings Enhancement
$0 to $29,999 14%
$30,000 to $44,999 12%
$45,000 to $59,999 9%
$60,000 to $74,999 6%
$75,000 to $99,999 4%
$100,000 and above 2%
For account Category IV the Earnings Enhancements are based on the two percent (2%) rate.
For account Category V, no Earnings Enhancement is paid.
For account Category VI, the Earnings Enhancements are based on the federal AGI reported for the previous year by the beneficiary’s family and are paid to the same rate schedule as used for account Categories I, II and III.
For account Categories I, II, III and VI that do not provide documentation of the federal AGI, the Earnings Enhancements are based on the two percent (2%) rate.

Earnings Enhancements are awarded annually and posted to individual accounts as of December 31 of each year.

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There are six categories:

Category I
Parents, grandparents, court-ordered custodians, persons claiming the beneficiary as a dependent on their federal income tax return, if, at the time the Account Application is submitted, the account owner or beneficiary is a resident of the state.
Category II
A person or persons determined by LOSFA to be a Member of the Family of the beneficiary and, at the time the Account Application is submitted, the account owner or beneficiary is a resident of the state. Members of the family include, in addition to the beneficiary’s spouse, adults related to the beneficiary as brothers, sisters, aunts, uncles, first cousins, in-laws, step-parents, step-siblings, and spouses of these listed persons.
Category III
An Independent Student who is a resident of the state.
Category IV
Any other person or Legal Entity if, at the time the Account Application is submitted, the beneficiary is a resident of the state.
Category V
Any other person or Legal Entity that, at the time the Account Application is submitted, is a resident of the state and the beneficiary is not a resident of the state.
Category VI
Any other person or Legal Entity or any government entity, and at the time of the submission of the Account Application:
The beneficiary is a resident of the state;
The federal adjusted income of the beneficiary’s family is less than $30,000 or the beneficiary is eligible for a free lunch under the Richard B. Russell National School Act (42 U.S.C. 1751 et seq.); and
The beneficiary is not a member of the account owner’s family and is not a member of the family of any member or employee of LATTA or LOSFA.

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Earnings on START accounts are tax deferred until withdrawn. If the funds are used to pay Qualified Higher Education Expenses, the earnings are exempt from both state and federal taxes. Deposits to START accounts are deductible from reported Louisiana income, up to $2,400 per year, per beneficiary. Unused portions may be carried forward to subsequent tax years. Married couples filing jointly may deduct deposits to START accounts from Louisiana State Taxable Income up to a maximum of $4,800 per year, per beneficiary, and any unused portion may be carried forward to subsequent tax years. An account owner of a Category VI account may deduct twice the amount deposited per account per taxable year, up to $2,400 in donations. If the Category VI account owner does not use the full $4,800 exemption in any tax year, any unused exemption may be rolled forward to be used in future tax years.

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