Reflections by Randy Hodge
|Posted on May 2, 2018 at 3:55 PM|
Most people are aware that on January 1, 2018, a new federal tax plan went into effect. One of the provisions of this new tax plan is expanding the use of 529 Plans. Originally, a 529 plan was set up as a tax-advantaged savings plan designed to encourage saving for future college costs. They are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code, hence the name. Under the new tax laws, 529 Plans may now be used as a savings plan for private school tuition in addition to college.
This is exciting news for those interested in sending their child to a private school. But how does a 529 Plan work?
• An account must be established for the benefit of an individual, and contributions may be made starting at birth and continued throughout the beneficiary’s education.
• Contributions may be made to one or more accounts by one or more individuals without income restrictions on contributors or beneficiaries.
• Money inside of the account may generally be invested in stocks, bonds, mutual funds, ETF’s and other investments.
• As it grows, future income and growth inside of the account is not federally taxed.
• Future withdrawals are generally free of federal taxes if they are used for qualified education expenses.
• Up to $10,000 may be withdrawn annually for elementary or secondary education expenses.
Exactly what can these accounts be used for?
• If they are used for qualified education expenses, distributions from the account are federally tax-free.
• Qualified education expenses include things like tuition, books, supplies, tutoring, transportation, computers and certain other costs.
• Qualified education expenses can occur at the elementary, secondary or college level.
St. Patrick School would like to make sure our school families, as well as other families in our area are able to obtain further information about 529 Plans. Therefore, we will be hosting a presentation with a representative from Michigan’s 529 plan in our Parish Hall on Tuesday, May 8 at 6:00 p.m.
This presentation is open to the public and will provide information to those interested in using a 529 Plan to help pay for their children’s Catholic School education as well as for those who are interested in saving for college.
Please keep in mind that anyone can contribute to a 529 Plan. It doesn’t matter if you are a parent, grandparent, godparent, aunt or uncle. Anyone interested in helping to provide for a child’s education may contribute.
We hope to see you at the St. Patrick Parish Hall located at 122 N. West Street in Portland on Tuesday, May 8 beginning at 6:00 p.m. to join the discussion on 529 Plans and how you can make them best work for your family.