529 Plans After Tax Reform – Better Than Before26-Feb-2018
Qualified tuition plans, also known as “529 plans” in reference to the applicable Internal Revenue Code Section, have been around for years, allowing for tax-free investment gains as long as the funds are used for qualified higher education expenses. Some states, including Mississippi, even allow contributions to be deducted
529 plans are simple to set up, and taxpayers can contribute funds until the account reaches a maximum limit, which
A 529 plan distribution has always been tax-free if it is used to pay for “qualified higher education expenses” of the beneficiary (student). The TCJA provides that higher education expenses now include expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private or religious school. There is a $10,000 per beneficiary, per year limit on distributions from 529 plans for K-12 education expenses.
Clearly, the enhanced 529 plan applicability will benefit many taxpayers. There are several opportunities for using 529 plans in conjunction with your individual income tax planning strategies to reap the benefits of the new provisions while achieving your goals for education funding. Consult with your professional tax advisor to discuss the impact
Jessica Cooley is a member with GranthamPoole PLLC and is focused in the field of estate and trust taxation, having worked with many clients to navigate compliance and planning for trust, gift
***The above does not represent tax advice. Each situation is fact-dependent, and you should seek the advice of a competent advisor. GranthamPoole PLLC is a provider of tax, accounting, advisory and strategic services, partnering with clients across a broad spectrum of industries and sizes.