New Law Means Never Paying Federal Taxes for Bright Start

              FOR IMMEDIATE RELEASE Contact: John Hoffman
September 13, 2006 312/814-2997
New law means never paying federal taxes for Bright Start
CHICAGO -- Participants in Bright Start College Savings will no longer ever have to pay
federal income taxes on money they put into their accounts, Treasurer Judy Baar Topinka
said today. A new law taking effect this month makes all income that is invested in
Bright Start completely exempt from federal taxation.
"This is a giant step in making an attractive program almost irresistible for parents and
grandparents," Topinka said.
The Treasurer encouraged members of Congress in Illinois, both Democrats and
Republicans, to pass the law. She praised the bipartisan effort that made it finally come
true.
Until now, taxes on investments in Bright Start were only exempt until 2010. Without
the new law, participants would have had to pay income taxes on qualified withdrawals
beginning 2011. Now any money that is earned can be put into Bright Start, where it will
become automatically protected from the hands of the IRS.
After encouragement from Topinka in 2000, Bright Start investments also became
exempt from state taxation. In 2001, Topinka further supported one of the most generous
State tax deductions for college savers.
Topinka created the Bright Start College Savings plan in her office 2000. Since then
more than 136,000 people have invested in the program, putting in nearly $2 Billion for
college education. Bright Start offers a range of investment options accessed directly
through the program and through professional advisers. It is available to anyone who
wants to support a child's college education, and an account can be open for as little as
$25.
In addition, the Treasurer has offered more than $250,000 in scholarships through Bright
Start. This past November, Topinka also launched Bright Directions, an investment
program that is offered primarily through financial planners. The federal exemption also
covers Bright Directions.
- more -
From the Office of State Treasurer JUDY BAAR TOPINKA