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Planning how to use Section 529 funds?

December 27, 2018

Don't forget the tax rules if you plan on withdrawing money from a Section 529 savings plan. Here are a few considerations:

  • Expenses must be for education. The qualified distributions of funds you withdraw are tax-free as long as they are used to pay for college tuition, room and board, computers and other qualified education expenses.
     

  • Elementary and secondary school tuition now counts. As a result of recent tax law changes, Section 529 plan funds can be used for up to $10,000 in tuition expenses for elementary and secondary schools.
     

  • 529 plan funds can be rolled into an ABLE account. You may roll over money from a 529 plan to an ABLE account for a child who has special needs (as long as both accounts are for the same beneficiary). You may roll over up to the annual contribution limit of $15,000. 

     

This new option may be especially helpful for a family that started saving for child's college education but now aren't sure they'll go to college because of a disability. Call for more information. We can help you make sure you're taking the most tax-effective steps when using your Section 529 plan distributions.

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