Posted: 1/15/2018 12:51:46 PM EDT
| From what I’ve been reading 529s have been expaned to K-12 privte and home schools. Does anyone have more info on this? |
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https://www.nytimes.com/2017/12/21/your-money/529-plans-taxes-private-school.html
So it actually happened. Just last month, it was not certain that the Senate would go along with the House of Representatives’ proposal to let families use 529 college savings plans to pay for private school from elementary school onward. In a bill that offered many perks for the wealthy, the 529 provision was a particularly brazen giveaway. After all, it’s mostly wealthier people who can save enough to reap large benefits from the provision, which allows $10,000 in annual tax-free 529 account withdrawals for pre-college students starting in 2018. But it really did happen, and on Friday, President Trump signed the bill that makes it the law of the land. The short-term opportunities for affluent families are potentially worth five figures. The schools, however, will now confront a major financial aid question that the new bill forces on them. And states could make offsetting tax changes that cost 529 savers money. Any eventual populist blowback could threaten the plans, too. But let’s start with the good news, for those who have the money and the inclination. With 529 plans, you put money in, let it grow for years in mutual funds and then pull it out to use for higher education expenses. When you do, you don’t pay capital gains taxes on what you’ve earned over time. |
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Interesting.
The big risk being that you superfund 10 years of private schooling costs ($100,000) in addition to what you already contribute to college savings, and they pull the rug out and set this back to higher education only. You might have overfunded that 529 and not be able to spend it all on education, making it subject to tax penalties upon withdrawal. I wish Government would stop playing around with this stuff. Do we have any examples where a tax shelter was rolled back and it wasn't phased in over time? I looked at 529's for my kids college, and just determined I'd rather keep the money in my own control.... just because you never know what is going to happen. I am sure hindsight will be 20/20 on this and whatever I do... it isnt the right thing. 
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Sorry about the mayonnaise, guys.
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Originally Posted By FALARAK:
Interesting. The big risk being that you superfund 10 years of private schooling costs ($100,000) in addition to what you already contribute to college savings, and they pull the rug out and set this back to higher education only. You might have overfunded that 529 and not be able to spend it all on education, making it subject to tax penalties upon withdrawal. I wish Government would stop playing around with this stuff. Do we have any examples where a tax shelter was rolled back and it wasn't phased in over time? I looked at 529's for my kids college, and just determined I'd rather keep the money in my own control.... just because you never know what is going to happen. I am sure hindsight will be 20/20 on this and whatever I do... it isnt the right thing. |
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Originally Posted By Kbear:
I would hope local school districts dont care. Most are funded through local property taxes, not federal taxes. My wife and I are looking in to setting up a 529 this year, to fund next year’s home school expenses. The pre-tax benifit should stretch our education dollars. Originally Posted By Kbear:
Originally Posted By FALARAK:
Interesting. The big risk being that you superfund 10 years of private schooling costs ($100,000) in addition to what you already contribute to college savings, and they pull the rug out and set this back to higher education only. You might have overfunded that 529 and not be able to spend it all on education, making it subject to tax penalties upon withdrawal. I wish Government would stop playing around with this stuff. Do we have any examples where a tax shelter was rolled back and it wasn't phased in over time? I looked at 529's for my kids college, and just determined I'd rather keep the money in my own control.... just because you never know what is going to happen. I am sure hindsight will be 20/20 on this and whatever I do... it isnt the right thing. Contributions to a 529 are not tax deductible. That would be HUGE. The earnings grow tax free. This new change (allowing withdrawals for private school prior to higher education) only really helps people who have a LOT of money, such as the ability to pre-fund a 529 with $170,000 or more (per child), then be able withdraw the money $10,000 per year for private school, while the remainder grows tax free. Where is the pretax benefit? |
Sorry about the mayonnaise, guys.
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Originally Posted By FALARAK: Pretax??? Contributions to a 529 are not tax deductible. That would be HUGE. The earnings grow tax free. This only really helps people who have a LOT of money, such as the ability to pre-fun a 529 with $170,000 or more (per child), then be able withdraw the money $10,000 per year for private school, while the remainder grows tax free. Where is the pretax benefit? |
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Originally Posted By Kbear: You are correct. I reread over 529 plans, I did conflate them with retirement plans. Tax exempt growth, not pre tax contributions. |