President Donald Trump signed An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 on Friday, December 22, 2017. While the Act has effects on a wide range of tax situations, for this article we shall examine the effects the Act will have on the tax-advantaged savings plan known as the 529 plan.
The United States Securities and Exchange Commission defines 529 Plans as follows:
"A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code."
The IRS offers a detailed explanation of 529 plans. The following video answers the question "What is a 529 plan?"
What the recently enacted changes to the tax code did to 529 plans is to add K-12 private schools. 529 plans now permit you to save for both college educations and K-12 private school educations.
Now, just as is the case with private schools, perception often clouds reality. The popular press frequently refers to private schools as elitist and for rich kids. The same stigma will undoubtedly be leveled at the expansion of 529 plans to include K-12 private schools. But when you actually examine 529 plans as a whole and more specifically the 529 plan which operates in your state, you
Beginning the school search process is a lot of fun. Those beautiful photographs of tree-lined campuses and sports activities, the candid shots of classroom scenes portraying kind, patient teachers, the history of the school and its many accomplishments over the years as well as all those famous graduates - it is all very impressive. So, you make a list of schools which you want to examine in greater detail. At this point in your school search process, the question which I posed in the title of this article begins to surface.
I can hear you wondering how you are going to compare schools objectively when the costs seem to be so different from one school to the next. One boarding school charges $56,000 for tuition, room and board while another school in the same state lists its tuition, room and board as $28,000. Why, then, do some schools cost so much and some cost so little?
Your costs for schools which charge the most for their services range from $45,000 to $65,000. These schools are residential schools or what we commonly call boarding schools. As well as charging for tuition and related expenses, these schools have to bill for room and board. You will notice that some schools offer two types of boarding arrangements. One is the customary seven-day a week boarding; the other is a five-day boarding scheme where the students reside at the school during the week and return home on the weekends. The five-day boarding scheme costs