What did you think of how the new tax law affects 529 college savings plan?

Wanderer wrote: Forum posters ... you need to review the recently passed US Tax Code restructure. Congress is quite proud of their achievements. After you consider the tax code restructure move your money to the mattress! It was noted in the Star Tribune in Minneapolis on Saturday, December 2nd that now the Republicans are comfortable that their members understand their role (how they are suppose to vote as members of the party) and will tackle balancing the budget by right sizing entitlement benefits such as Social Security, Medicare and Medicaid (reduce benefits). Many tax breaks were eliminated and/or right sized (downsized). The results are stunning and the bill effectively finishes the job of eliminating the "Middle Class". Colleges are hyper ventilating over the impact it will potentially have on their future and tax breaks associated with college. The Tax Code restructure is a must read for this forum! Unreal! GADS!!! Not through yet, I caught a look that they eliminated the mandated provision for a penalty if a person chooses not to be enrolled in Obama Care. Also, they placed caps on the write off for mortgage related expenses and eliminated the deduction for state and local taxes (it would now be included as part of gross income). Assuming no changes when the Congressional House and Senate meet to iron out wording differences President Trump is ready to sign the Law and expects Congress to start working on the budget balancing. Sure could go on a RANT but will spare all of you. As you look ahead on at your taxes take a read of some of the key tax code points.

I am planning to write a high level overview in the blogs section next month, so everyone should check it out!

Forum posters ... you need to review the recently passed US Tax Code restructure. Congress is quite proud of their achievements. After you consider the tax code restructure move your money to the mattress! It was noted in the Star Tribune in Minneapolis on Saturday, December 2nd that now the Republicans are comfortable that their members understand their role (how they are suppose to vote as members of the party) and will tackle balancing the budget by right sizing entitlement benefits such as Social Security, Medicare and Medicaid (reduce benefits). Many tax breaks were eliminated and/or right sized (downsized). The results are stunning and the bill effectively finishes the job of eliminating the "Middle Class". Colleges are hyper ventilating over the impact it will potentially have on their future and tax breaks associated with college. The Tax Code restructure is a must read for this forum! Unreal! GADS!!! Not through yet, I caught a look that they eliminated the mandated provision for a penalty if a person chooses not to be enrolled in Obama Care. Also, they placed caps on the write off for mortgage related expenses and eliminated the deduction for state and local taxes (it would now be included as part of gross income). Assuming no changes when the Congressional House and Senate meet to iron out wording differences President Trump is ready to sign the Law and expects Congress to start working on the budget balancing. Sure could go on a RANT but will spare all of you. As you look ahead on at your taxes take a read of some of the key tax code points.

Go to Thewhitehouse.gov and scroll over the Issues tab. The college issue is not on the list of the top 8 issues the White House is working on yet.

Maybe next year.

Pinky wrote: Yes, you can use the funds from a 529 for expenses other than tuition. There is even a clause now that you can use it for a computer and internet access. Housing on campus is no problem as long as they are students at least 1/2 time and some off campus housing can qualify as well. Books, fees, etc. are all college related and funds can be used as long as the student meets the criteria.

Thats great to know! Thanks for the information Pinky. I just opened a 529 account so well see how it goes!

Yes, you can use the funds from a 529 for expenses other than tuition. There is even a clause now that you can use it for a computer and internet access. Housing on campus is no problem as long as they are students at least 1/2 time and some off campus housing can qualify as well. Books, fees, etc. are all college related and funds can be used as long as the student meets the criteria.

Goldbug wrote: Before you consider withdrawing the funds, look at the terms for the 529. If it is only tuition that the state will provide and your 529 can be used for room and board, it will still be very useful. There are also costs like books, extra classes etc, that might not be covered.

That is a good point. The logic answer for the government would be allow you to use the funds for another purpose without facing the penalty. However I think we can all agree the government isn't the most logical at times.

Before you consider withdrawing the funds, look at the terms for the 529. If it is only tuition that the state will provide and your 529 can be used for room and board, it will still be very useful. There are also costs like books, extra classes etc, that might not be covered.

they will not be able to take away for existing 529 plan. Going forward could change, but you should feel safe with whatever you have now.

That is a good question Breakinger. A 529 is much like a 401K except there are no taxes upon withdrawal if used for higher education. Straight from the horses mouth I found this quote: " Withdrawals not made for qualified higher education expenses carry a 10% federal penalty on earnings unless the child receives a full scholarship, becomes disabled, or passes away." You could also roll it over into another state plan without penalty.

That's a good question, and one that Trump needs to give us the answer to.

You might be able to keep it for other college related expenses like room and board and food

My state is currently thinking about making 2 & 4 year colleges free to anyone who makes under $125,000. This is definitely a threshold that my husband and I would never meet. What I'm wondering is, what will happen to the 529 savings plan that we have already started for our children if they are now going to be having free college tuition?