A GREAT development with 529 plans may change your decisions on how to save for college.
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New 529 Plan Rules: A Closer Look at the Changes
Investing in your child’s education is one of the most important financial responsibilities parents have. To encourage saving for future education expenses, the government introduced 529 plans. These plans offer tax advantages and allow families to save for their children’s education in a variety of investment options. Recently, new rules have been implemented regarding 529 plans, and it is essential to understand the changes and how they may impact your savings strategy.
One of the significant changes to 529 plans is the expansion of qualified education expenses. Previously, these plans only covered expenses related to higher education, such as college or university tuition. However, the new rules now allow families to use 529 plan funds for qualified K-12 expenses as well. This means that parents can withdraw funds from their 529 plans to cover private school tuition or other related expenses at the elementary or secondary level.
Additionally, another important change in the new 529 plan rules is the flexibility to rollover funds. Previously, once funds were allocated to a specific beneficiary, they could not be transferred to another family member without incurring taxes and penalties. Now, the rules allow for the transfer of funds to another beneficiary within the same family without tax consequences. This change is particularly beneficial for families with multiple children, as unused funds for one child can be transferred to siblings.
Another noteworthy adjustment to the 529 plan rules is the annual gift tax exclusion limit. Previous rules stated that contributions could not exceed the annual gift tax exclusion limit, which is currently set at $15,000 per individual. However, the new rules permit a one-time contribution of up to $75,000 per beneficiary, or $150,000 for married couples, without incurring gift taxes. This substantial increase allows parents to contribute more substantial amounts to their children’s education funds, potentially maximizing the growth of their investments.
Furthermore, the new rules now permit families to use 529 plan funds to repay student loans. This change is especially significant for individuals who have graduated from college and are facing the burden of student loan debt. Using 529 plan funds for loan repayments can help alleviate some of the financial stress associated with higher education costs.
While the new 529 plan rules present exciting opportunities for families, it is essential to consult with a financial advisor to ensure your investment strategy aligns with your goals. It is crucial to understand that each state may have different rules and limits governing 529 plans, so it is essential to be well-informed about the specific regulations in your state.
In conclusion, the new 529 plan rules bring exciting changes to the landscape of education savings. The expansion of qualified expenses, flexibility in transferring funds, increased contribution limits, and the ability to use funds for student loan repayments provide families with more options and opportunities to ensure their children’s education is adequately funded. With proper planning and guidance, the new 529 plan rules can help families better achieve their educational savings goals.
What if I have big, giant DONKEY BALLS?!
Does this include funds in a Vanguard Education Savings Account?
?! If there’s more than 35k in the 529 then what? You can only put 35k total ever into the Roth?
Took 4 minutes to get to the point. Jeez
Great info.
This video is riddled with inaccuracies, omissions, and incomplete information. As a 529 industry professional, I'd strongly recommend you contact your home state's 529 administrator for more details on the provisions that were wrapped up in SECURE Act 2.0.
Great info! If the child goes to college, can you use it for both college and the Roth? Or if there are extra funds after college (wouldn’t that be great!) can extra funds be moved to the Roth? If some is used for qualified k-12 expenses, can funds still be used for the Roth?
Thanks for the info! Just started my 4 year old twins 529s!
will the 15 year clock reset if I change the beneficiary from my child to grandchild? thanks
I currently have a Michigan Plan for all 3 of my kids.
What Ohio has the best plan
What are your thoughts on GET accounts?
Is it a one-time $35k move? Or can you move $35k on different years?
So I could transfer the leftover funds from my chiid's name to my spouse, then roll it to a Roth IRA?
Does this work for grandparents plans?
So if i put $25,000 in a 529 and it grows to $36,000 at year 15, i can only covert it to a Roth ira for the $35k? The remaining $1,000 must stay in the 529?
Should people who are waiting now to take their SSI until older to get more sign up to take it with what the GOP is threatening?