https://clergytaxpro.net/taxes/wp-content/uploads/2018/09/College.jpg 540 960 Susan https://clergytaxpro.net/taxes/wp-content/uploads/2016/12/logo-dark-300x83.png Susan2018-09-06 14:12:172018-09-06 14:12:17Back to School with the new Tax Cuts and Jobs Act - 529 and ABLE
Back to School with the new Tax Cuts and Jobs Act – 529 and ABLE
September is “Back to School” season for many families, and the IRS provides an incentive to save for your child’s education through tax-advantaged 529 plans and ABLE accounts. The new tax law (TCJA) has made some changes to plans.
A 529 plan is a college savings plan set up for the benefit of your child or grandchild.
- Contributions are invested and grow tax-free
- Distributions to pay for tuition, books, fees and other qualified expenses, remain tax-free
- You can choose to set up a plan in most any state. Some states offer a state tax deduction
- Use your 529 at more than 6,000 US colleges and universities, and more than 400 foreign colleges and universities
- New provision of TCJA – tax-free distributions up to $10K each year can be used for tuition at public, private, and religious K-12 schools
The TCJA also made important changes to ABLE accounts, a type of 529 plan to help disabled people pay for qualified disability-related expenses.
- Annual contributions up to $15,000 grow tax-free
- Distributions are tax-free for qualified expenses such as housing, education, employment training, personal support services and more
- Families can now rollover funds from a 529 plan to an ABLE account
- A percentage of contributions may now be eligible for the Saver’s Credit on an individual’s tax return
Whatever your needs, these accounts now provide a great way to save tax-free with even more flexibility!