Uncommon Benefits You Should Know about 529 College Savings Plans

1) Private K–12 Tuition Is Qualified

529 withdrawals can be used for up to $10,000 of tuition expenses at private K–12 schools. Additional expenses such as computers, supplies, travel, and other costs are not qualified.

2) Pay Off Student Loans

Many families take student loans even when they have sufficient savings, not knowing for sure whether their savings will be enough. For those that graduate with some money leftover in their 529 account, it can be used for up to $10,000 in certain student loan repayments.

3) The Best Estate Planning Tools

Contributions to a 529 plan are considered completed gifts to the beneficiary and can be “superfunded” for up to $75,000 per beneficiary in a single year, using five years’ worth of annual gift tax exemption up front. For retirees with significant RMDs (required minimum distributions) from qualified accounts such as 401(k)s and traditional IRAs the 529 plan offers high contribution limits across multiple beneficiaries while retaining control of the assets during the lifetime of the account owner. Assets also pass by contract upon death, avoiding probate and estate tax.

4) Registered Apprenticeship Programs Qualify

You can make qualified withdrawals from a 529 plan for registered apprenticeship programs. There are over 24,000 apprenticeship programs nationwide, according to the U.S. Department of Labor. The programs cover a wide range of industries from healthcare to engineering and manufacturing, among others, with an average annual salary for those that complete their apprenticeship of $70,000.

5) International Schools Qualify

Schools outside the United States and its territories are considered qualified higher education institutions, meaning you can make tax-free withdrawals from a 529 plan for qualifying expenses at those colleges. Your beneficiary can still attend University of Dublin or Oxford and qualify for tax-free distributions. You can find the full list of over 6,000 schools from the U.S. Department of Education.

6) Qualified Education Expenses are Extensive

Qualified educational expenses that can be paid using your 529 Savings are extensive, and there are different withdrawal methods to ensure that you get the most from your 529 Savings. Contact us to learn more about qualified education expenses and withdrawal options.