A Guide to Embark’s Tax Benefits: Helping Every Dollar Go Toward Education.

Grow your education savings, tax-free.

Everyone agrees: Saving for education is important. That’s why 529 education savings accounts like Embark have special tax perks.

Unlike a traditional savings or investment account, an Embark 529 account grows 100% tax-free. Tax-free compound growth means you won’t pay federal or state taxes on the interest your account earns every year. Instead, those funds stay in your pocket and continue to work hard and earn more interest over time. Without losing money to taxes every year, your account can grow bigger, faster.

Another key difference is that your Embark account is funded with after-tax dollars. So when it’s time for school, you can withdraw your Embark savings tax-free to cover qualified expenses. This includes things like tuition, fees, books, supplies, and even some room and board costs.

With both tax-free account growth and tax-free withdrawals, Embark ensures that every dollar of your investment works to support your kid’s education.

How does the Oregon Education Savings Credit work?

The tax benefits don’t stop there. You can also get rewarded for contributing to an Embark account every year with an Oregon state tax credit. The Oregon Education Savings credit is a refundable income tax credit worth up to $380 for joint filers, and $190 for single filers.

You don’t need to owe any taxes, or be the owner of the Embark account, to claim the tax credit. So friends and family who make gift contributions can get an extra boost at tax time, too.

Because the tax credit is based on your Adjusted Gross Income and tax filing status, it hasn’t always been easy to calculate. But with our new tax credit calculator, you can quickly estimate your tax credit based on your Embark account contributions. It’ll also show you how an additional contribution can help you earn the full credit amount. Just contribute before Tax Day, to earn the credit.

You can claim the credit while filing your taxes using online tax software or a paper form. Most tax software will walk you through how to claim your credit, but the process will be a bit more manual when paper filing.

Save for different educational paths, tax-free.

We know there’s more to education than four-year universities, so no matter what path your kid picks, your savings can support those dreams.

You can withdraw Embark funds tax-free to pay for all kinds of eligible education institutions. This includes trade schools, community colleges, certification programs, apprenticeships, and more. You can also use funds to pay for some schools abroad.

So whether they want to be a carpenter, an electrician, or an accountant, your kid can follow their dreams. And your Embark savings can help make it a reality.

Roll over funds to a Roth IRA, tax-free.

But what happens if your kid doesn’t use all their Embark funds? Now, you can roll over up to $35,000 from an Embark account into a Roth IRA for your child without paying taxes on any of it. A Roth IRA is a retirement savings account made of after-tax dollars that grows tax-free, and can be used for qualified distributions tax-free, too.

We know plans change, and life can be unpredictable. So if your child gets a scholarship, graduates early, or chooses a different path, your funds can give them a head start on retirement instead. With flexible options like the 529 to Roth IRA rollover, you don’t need to worry about overfunding your Embark account.

"I love that if my child gets a scholarship or decides not to go to college, we can convert those funds into a Roth IRA for them for their future success."

— Eric, Portland

A few more details.

1. Are contributions made pre-tax or after-tax?
   You can only add after-tax dollars to your Embark account. This also means that funds can be withdrawn tax-free to cover eligible education expenses.
2. Can I roll over funds from another 529 account into my Embark account?
   Yes! Just download and complete our Rollover Form (PDF) to transfer your funds and consolidate your education savings into one account.
3. How do gift contributions affect your tax credit?
   If your loved one contributes to your Embark account, but they live outside of Oregon and don’t file an Oregon state tax return, those gift contributions can help you earn the Oregon tax credit.