Near
the end of 2017, the Tax Cuts and Jobs Act was signed into law. As a direct
result of this bill, there have been many changes made to the tax code, changes
that you should be aware of since
For
example, 529 plans can now, under the new law, be used for financing as much as
$10,000 per year per child for a private school education.
It
is important to understand, however, that while this change is federal, states
can and likely will make their own new laws regarding 529 plans. It is likely,
for example, that, in the near future, private schools will begin factoring 529
plans into their financial aid packages, which could mean that students are now
eligible for less financial aid since, in theory, they will have other funds-
their parents’ 529 funds- to access.
If
you have a child in private school or you are thinking about putting your child
in private school, talk to your financial advisor about whether or not
investing in a 529 plan is a smart idea. Many are speculating that this change,
while it seems positive at first, could actually end up hurting more than
helping, as least as far as individual taxpayers are concerned. Plus, there is
the uncertainty factor since no one knows exactly what regulations individual
states are going to put into effect.
Thus,
don’t be too quick to jump on the bandwagon of seeing this change as a good
one. Talk about the potential implications with your tax advisor before making
any quick decisions about how best to save for your child’s education, both now
and in the future.