Dollars invested in The Education Plan may grow faster than money in a taxable account that's invested the same way. That's because the money has the potential to grow tax free for the life of the account. What's more, you can withdraw the money tax free, as long as it's used to pay for qualified higher education expenses.1
It pays to live in New Mexico. While you don't need to live in the state or even go to college there, New Mexico residents enjoy some additional state tax benefits by saving with The Education Plan:
- Contributions to the Plan are deductible from New Mexico state taxable income.
- Any earnings grow free from New Mexico state taxes.
- Qualified withdrawals are exempt from New Mexico state tax.
1. When withdrawals are used for other purposes, the earnings portion of the withdrawal is subject to federal income taxes and any applicable state income tax, as well as an additional 10% federal tax and the "recapture" of all previous New Mexico tax deductions taken for contributions to an account.