More Federal Tax Breaks Proposed for 529 Plans
In light of the recession, we’ve already seen the federal government give more tax breaks for 529 plans. So far it has been in the form of helping parents with kids already in college through expanding eligible 529 plan expenses.
But a new proposal could also provide upfront tax benefits when you contribute to your 529 plan. The proposal would give you up to a $2,000 immediate tax credit when contributing to a 529 plan. Although this sounds nice, keep in mind there’s a lot of work to before this becomes law (if it even does).
Currently your federal tax benefits for 529 plan are limited to not paying taxes on your earnings in 529 plans. An upfront tax credit would fundamentally alter the value of 529 plans…making them much more attractive. (Some states already offer upfront credits).
Would this tax credit also apply to a Coverdell Account?
THANK YOU…this information is encouraging and reassuring….the real question is…which fund will provide the best return…and in light of the happenings…what do we need to
evaluate the trustworthiness of the managers..
Alan, if knew which fund will provide the best return I’d be a very rich person
What the past year has taught us is you shouldn’t have much exposure to stocks if you need to access the money within a 5 year time frame.
Hello! Can someone tell me if The VPEP will have another enrollment date, or is not ever going to be offered again? I am confused. Will I be able to enroll next year in VPEP?
I have been told that a Roth IRA is a vehicle to invest for college funding for the following reasons:1) grows tax free. 2) Is not reported in the FAFSA 3)withdrawls of contributions (not earnings)can be made at any time after five years without tax consequences or 10% penalty even if the owner is younger than 59.5 if they are used to pay for “qualified” college expenses. Can anybody tell me where I can find a detailed list of what the IRS defines as “Qualified” expenses?? I.E. Is paying off the balance of my kid student loan a “qualified” expense??
Thanx, Bill
Are there any tax benefits that derive from 529 plans if they are funded in a state other than that in which the founder resides? I live in Arizona, but utilized the Utah plan.
we need federal tax breaks in addition to exempting 509 earnings such as deductions other than just room & board such as expenses for cost of books, etc. Inflation and the cost of college education has risen signifall.
THANX
Is there a way to deduct losses on my 529 from my income taxes?
My son is 9 and I want to invest for him..I pay alot in child support so I only have a little. 529? roth? Or mutual fund? What is he does not want to attend school? What happens to the 529?
Just wanted to say many many thanks for all your time and efforts. You are one of a kind, and I wanted you to know how much I appreciate you, and the information you continue to send us. Margie