Exciting Plan Enhancements for the Bright Directions Advisor-Sold Plan
Our 529 college savings plan continues to experience double digit growth in accounts and assets and has been recognized as one of the top two advisor-sold plans in the nation by Morningstar1, earning a Silver Rating.
In the next several weeks, you may hear that there are changes coming to the Illinois 529 college savings programs. We wanted to make you aware that those changes will not impact your Bright Directions account. Bright Directions will continue to be the same low-cost, multi-managed, flexible program it has always been.
My office recently concluded an open and competitive bid process and we are excited to share that Union Bank & Trust will remain Bright Directions’ program manager. Union Bank & Trust has managed the program since its inception in 2005. In mid-July, we will lower the Bright Directions program management fee by an additional 17%, on top of the 44% fee cut we were able to negotiate in 2015. In addition, we will cut my office’s administrative fees by 40%. These fee reductions were achieved while retaining the program’s outstanding benefits, features, and services. These changes mean that more of your hard-earned dollars stay in your college savings account. These fee changes will take place automatically in mid-July.
There is no action required from you at this time. Union Bank & Trust will be providing a Program Disclosure Statement Supplement in early July with additional details.
Keep in mind, Illinois has a generous $10,000 and $20,000 state income tax deduction for contributions2. This is a great time to start an automatic investing plan, increase your monthly savings amount, or make an additional contribution. Any money you set aside now will help down the road when it comes time to pay for the ever-increasing costs of college.
Again, a sincere thank you for investing with Bright Directions.
An individual who files an individual Illinois state income tax return will be able to deduct up to $10,000 per tax year (up to $20,000 for married taxpayers filing a joint Illinois state income tax return) for their total, combined contributions to the Bright Directions College Savings Program, the Bright Start College Savings Program, and CollegeIllinois! during that tax year. The $10,000 (individual) and $20,000 (joint) limit on deductions will apply to total contributions made without regard to whether the contributions are made to a single account or more than one account. The amount of any deduction previously taken for Illinois income tax purposes is added back to Illinois taxable income in the event an Account Owner takes a Nonqualified Withdrawal from an Account or if such assets are rolled over to a non-Illinois 529 plan. If Illinois tax rates have increased since the original contribution, the additional tax liability may exceed the tax savings from the deduction.
Withdrawals used to pay for qualified higher education expenses are free from federal and Illinois state income tax. Qualified higher education expenses include tuition, fees, books, supplies, and equipment required for enrollment or attendance; certain room and board expenses incurred by students who are enrolled at least half-time; the purchase of computer or peripheral equipment, computer software, or Internet access and related services, if used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible educational institution; and certain expenses for special needs services needed by a special needs beneficiary.
Important Legal Information