If the IRA holder turns 70½ this year, he or she can defer the first distribution until April 1 of the next year. If the holder is older, he or she would normally be required to take an RMD before December 31 of this year. RMDs are considered taxable income for the year in which they are taken.
Taxpayers whose status is "married filing separately" may be able to claim a deduction or credit, but it may be reduced, depending on state tax rules. Consult a tax advisor about your situation.
Use your annual state taxable income, which may differ from your annual federal taxable income.
State contribution rules vary. Typically, plans do not have an annual contribution limit, but they do have an aggregate account limit. In other words, you can contribute until your total account balance, including any earnings, reaches a certain level. Once that level is reached, you can no longer contribute, but earnings can continue to accumulate. Currently, Michigan has the highest limit at $500,000. Keep in mind that contributions to a 529 plan are considered taxable gifts, and any amount over the current $14,000 federal annual exemption may be subject to gift taxes. Ask your tax advisor about gift tax rules.