Federal & State Tax Considerations

What Are the Federal Income Tax Advantages?
What Are the State Income Tax Advantages?
What Are the Federal Gift and Estate Tax Advantages?
Can an Individual Contribute to or Withdraw From Both a Bright Directions® Account and a Coverdell Education Savings Account?

1. What Are the Federal Income Tax Advantages?

Tax-deferred growth
Tax-free withdrawals for qualified higher education expenses¹

2. What Are the State Income Tax Advantages?

Tax-deferred growth
Tax-free withdrawals for qualified higher education expenses¹
State of Illinois income tax deduction²

$20,000 if filing jointly
$10,000 per individual tax payer

3. What Are the Federal Gift and Estate Tax Advantages?

Contribute up to $13,000 ($26,000 for married couples) without incurring federal gift tax
Special provisions may be available for 5-year, front-load accelerated gifts

4. Can an Individual Contribute to or Withdraw From Both a Bright Directions® Account and a Coverdell Education Savings Account?

Contribute or withdraw funds from both accounts in the same year

1) Withdrawals used to pay for qualified higher education expenses are income tax-free (Federal and State of Illinois). Qualified higher education expenses include tuition, fees, books, supplies, and equipment required for enrollment at a qualified institution of higher education. Room and board is considered a qualified higher education expense if the student is enrolled on at least a half-time basis.

2) Individuals who file individual Illinois state income tax returns can deduct up to $10,000 per tax year ($20,000 if filing jointly) 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.

IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Investment Products: Not FDIC Insured. No Bank Guarantee. May Lose Value.

The Bright Directions® College Savings Program is part of the Illinois College Savings Pool and is designed to qualify as a qualified tuition program under the provisions of Section 529 of the Internal Revenue Code. The Bright Directions® College Savings Program is sponsored by the State of Illinois and administered by the Illinois State Treasurer, as Trustee. Union Bank & Trust Company serves as Program Manager, and Northern Trust Securities, Inc., acts as Distributor.

Securities, products, and services are offered by Northern Trust Securities, Inc., member FINRA.

You should be aware that other states may sponsor their own qualified tuition plans and may offer a state tax deduction or other benefits that are limited to residents who invest in that plan. You should consult with a tax advisor about state and local taxes.

Withdrawals used to pay for qualified higher education expenses are income tax-free (Federal and State of Illinois). Qualified higher education expenses include tuition, fees, books, supplies, and equipment required for enrollment at a qualified institution of higher education. Room and board is considered a qualified higher education expense if the student is enrolled on at least a half-time basis.

Every individual’s tax situation is different, and it is important to consult a qualified tax advisor regarding the application of the Program’s benefits to your own individual situation.

There is no guarantee that any investment portfolio will achieve its investment goals. The value of an account will go up or down based on the performance of the Portfolio in which the account is invested. When funds are withdrawn, they may have more or less than the total contributions made to the account. Past investment performance is no guarantee of future results.

Investments in the Bright Directions® College Savings Program are not guaranteed or insured by the State of Illinois, the Illinois State Treasurer, Union Bank & Trust Company, Northern Trust Securities, Inc., the Federal Deposit Insurance Corporation, or any other entity. An investor should consider the investment objectives, risks, and charges and expenses associated with municipal fund securities and the underlying investment companies before investing. Please contact your investment professional or call 866–722–7283 to obtain a Program Disclosure Statement (issuer’s official statement) or prospectus for any of the underlying funds. Please read the Program Disclosure Statement carefully prior to investing.