May 29th is designated as National 529 College Savings Plan Awareness Day, an annual day to celebrate and publicize the benefits of using a 529 plan to fund your family's educational needs.
Revolution Partners has frequently and in-depth blogged on the benefits of 529s over the years including: “Six Reasons to Save for Education with a 529 Plan”, “Managing the Top Three Education-Planning Concerns” and “Reason 2 of 5 You Need a Financial Plan.” You can read those blogs and other thought provoking areas we advocate for on our site.
This year, we can report the tax act passed late in 2017 contains two substantial enhancements to 529 Plans beginning in and extending beyond 2018.
First, 529 Plans aren't just for college anymore. Now up to $10,000 per year may be qualified distributions from existing or new 529 plans to pay for private school tuition in the K-12 years. This can add flexibility and the potential for even greater tax savings beyond just providing for higher education. Twelve years of private school at $10,000 per year can rival or even exceed the cost of college.
Second, 529 Plans may now be rolled into ABLE accounts and without limitation. ABLE accounts were established in 2014 to provide for disabled individuals. This could be particularly helpful where a 529 account was established before a disability was diagnosed. Again, flexibility is a key benefit of this change.
529 Plans continue to be one of the most significant and flexible ways to create effectively tax-free earnings streams when used to fund eligible expenses. However, these benefits are not without limitations and complexities. The professionals at Revolution Partners can help you evaluate your unique family and financial situation in order determine how 529 accounts may best fit into your family's plan.
We would be glad to help you start with financial planning today! Contact us if you would like to learn more.