Watch the final video in our nine-part Tax Talks Video Series for ways to maximize the benefits of your 529 plan with key insights from Jonathan Curry-Edwards, CPA, Senior Tax Manager.
Read the Transcript
529 plans are a great way to save for a child’s education cost. Contributions grow tax-free and distributions are not taxed if used for qualified educations costs.
Beginning in 2018, the Tax Cuts and Jobs Act changed the law for federal income tax purposes to allow distributions of up to $10,000.00 per beneficiary for elementary and secondary public, private, or religious schools. Individuals should check with their own state on how the new law is taxed as it may be different from federal income tax purposes. It’s also important to remember contributions to a 529 plan are considered gifts to the beneficiary and in 2018, the annual exclusion gift amount was increased to $15,000.00 per donate. There’s also an election available for individuals to contribute five years’ worth of annual gifts to a 529 plan in a single year gift tax-free. That’s $150,000.00 a married couple can contribute for one of their children without using any of their basic lifetime exemption.
If you have children, a 529 plan is a great way to save for future education costs. Your Friedman tax advisor can help you navigate 529 plans and incorporate it into your overall planning strategy.
Watch More Videos from this Exclusive Nine-part Series:
- Maximizing the Tax Benefit of Your Charitable Contributions with Jonathan Curry-Edwards, CPA, Partner
- Opportunity Zones with Steven Bokiess, CPA, Partner
- Transition Toll Tax with Edward Ajodah, CPA, JD, Principal
- Partner Audit Rules with Michael J. Greenwald, MPPM, CPA, Partner
- Tax Reform's Impact on the States with Tom Corrie, JD, LLM, Principal
- Planning Opportunity Leveraging Trusts with Jonathan Curry-Edwards, CPA, Senior Tax Manager
- Global Intangible Low Tax Income (GILTI) with Ryan Dudley, CPA, CA, CTA, MIT, Partner
- Foreign Derived Intangible Incomes (FDII) with Erasmo Bruno, LL.M., JD, CPA, Partner