Enrollment & Financial Aid |
Since 1996, 529 education savings plans have enabled families to save for college and get tax-free investment growth. Following passage of the Tax Cut and Jobs Act in December 2017, federal law regarding 529 plans now extends beyond higher education to include K-12 independent education.
The federal government authorizes 529 plans, but states sponsor the accounts, which means tax benefits vary by state. To further complicate matters, not all states have changed their laws to conform with the new federal ruling allowing 529 funds for K-12 private education. “Only just over half of the states have enacted the  legislation, which has left a lot of administrators and families at independent schools wondering what the ruling actually means for them,” said Jennifer Osland Hillen, NBOA’s vice president of professional development and business affairs.
A new policy brief from the Education Commission of the States helps answers some of these questions. Under federal law, 529 account holders can spend up to $10,000 a year from a 529 account on private K-12 school tuition and fees. But while some states have policies that conform to federal law, others have policies that do not conform or are unclear or pending. In 2018, four states passed laws that exclude use of 529 funds for private K-12 education, 11 passed laws that allow it, and two states introduced pending legislation. Federal law does not impact states with no income tax.
All states and D.C. offer 529 plans, either on their own or in partnership with another state, but the plans have different incentives and benefits. State policies may have one or more of the following five features:
For more information, read the full brief from Education Commission from the States. If you have questions about these issues with regard to K-12 schools, contact Jennifer Osland Hillen, NBOA vice president of professional development and business affairs, at email@example.com.#Tuition#Policy
529 Plans: What We Know Now (web-only article, Feb. 2018)
Half of States Allow 529 Savings for K-12 Tuition (news item, Jan. 2019)
NBOA Alert: Continued Impact of the Tax Cuts and Jobs Act on Independent Schools (web-only article, Oct. 2018)
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