Pennsylvania 529 Plan

The Pennsylvania 529 College and Career Savings Program is highly rated and offers significant state-level tax advantages that apply to any 529 plan, not just the Pennsylvania-sponsored versions.

Plan Options

Pennsylvania offers two distinct 529 plans administered by the PA Treasury.

• PA 529 Investment Plan (IP): Features 17 different investment options from Vanguard, including target enrollment portfolios and individual fund options. It has earned a Morningstar Gold Rating for three consecutive years (2023–2025).
• PA 529 Guaranteed Savings Plan (GSP): A lower-risk option where growth is tied to tuition inflation. It allows you to “lock in” tomorrow’s education at today’s rates by choosing a specific tuition level (e.g., State System of Higher Education or Ivy League).

Contribution & Tax Benefits

• State Tax Deduction: PA residents can deduct contributions of up to $19,000 per beneficiary for single filers and $38,000 for married couples in 2025. This deduction applies to contributions made to any state’s 529 plan (tax parity).
• Keystone Scholars: Children born to or adopted by Pennsylvania families in 2019 or later automatically receive a $100 starter deposit from the state.
• Aggregate Limit: Pennsylvania accepts contributions until the total balance of all accounts for a single beneficiary reaches $511,758.
• Employer Credit: Starting in 2025, Pennsylvania employers can receive a tax credit equal to 25% of matching contributions made to an employee’s 529 account, up to $500 per employee.

Qualified Expenses

• K-12 Tuition: You can use up to $10,000 per year per student for K-12 private or religious school tuition. Note: This limit is scheduled to increase to $20,000 starting January 1, 2026.
• Broad Use: Funds cover tuition, fees, room and board, books, and computers at eligible colleges, technical schools, and certified apprenticeship programs.
• Student Loans: Up to $10,000 (lifetime) can be used to pay down qualified student loans for the beneficiary or their siblings.
• Roth IRA Rollovers: Up to $35,000 of unused 529 funds can be rolled into a Roth IRA for the beneficiary, provided the account has been open for 15 years.