529 Plans Tax update
A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.
Effective January 1, 2018, expenses covered by 529 accounts have been expanded to include elementary and secondary school tuition, because of the recent tax-reform legislation. You may now use up to $10,000, each calendar year, from your 529 account for K-12 tuition (public, private, or religious). Please note that the money may come from multiple accounts; however, the $10,000 limit is for each beneficiary. A withdrawal for K-12 tuition expenses in excess of the $10,000, in a calendar year, may result in taxes and a 10% federal tax penalty on the earnings portion of the excess amount.