About 529 Plans

 A 529 plan “is a tax-advantaged savings plan designed to encourage saving for future college costs.” [1]

New Tax Law Expands 529 Use

The recent tax overhaul bill expands parents funding options to pay for private elementary and high school tuition.

Specifically, the new bill enables one to dip into a 529 plan to pay for any private school [1] – not just colleges. For example, if you have a large stash of cash in a 529 saved for college but the realities are that your youngster is struggling at school  this might be worth exploring. After all, if college is at risk because of present challenges a private school might be able to help.

Should I Raid My 529?

Raiding college savings funds to pay for lower school tuition isn’t something to be done lightly. However, it is an option now and one being worth aware of if you are considering private school for your child.

Before doing so it is worth stepping back and considering three things.

  1.  First, carefully monitor and learn about your expenses for a month. Observe your actual expenses not what you think they should be in the future. Can you still save for college or pay for some colleges based on your current situation or with some viable adjustments? And what will happen if the tax law changes again in a few year? Will you still be able to pay?
  2.  Second, with our kids it is easy to panic. Get rationale. Can some less drastic changes at school or at home help with the issues? Are charter schools or other public schools (yes, you have to move) an option? What is the full spectrum of options – and which qualify as good enough?
  3.  And finally, after the the rational exploration in steps one and two (and some meditation), follow your heart. Specifically, what do think you  wish you had did 20 years from now?  Do that and make it work by being the grown up.

If your family determines that private school is for you and you are going to raid the 529 plans to make it happen, immediately become a reader of this blog (paying-for-private-school.com) and the many other excellent financial management blogs out there. We can help.

References

  1. “An Introduction to 529 Plans.” SEC Emblem. December 04, 2017. Accessed December 30, 2017. https://www.sec.gov/reportspubs/investor-publications/investorpubsintro529htm.html.
  2.  Hobbs, Tawnell D. “Losing Students, Private Schools Try to Change.” The Wall Street Journal. December 29, 2017. Accessed December 30, 2017. https://www.wsj.com/articles/losing-students-private-schools-try-to-change-1514557437.
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