This was a game-changer for parents across the country.
With the Senate’s recent passage of the Tax Cuts and Jobs Act, parents now have a brand new way to save for their children’s futures.
Thanks to an amendment added to the bill by Senator Ted Cruz, tax-free 529 savings plans would be expanded to include not just college education expenses, but K-12 costs as well.
That’s right: tax-free contributions, just like you get from a retirement or health savings account.
The Cruz amendment expands the use of 529 dollars for two additional purposes–tuition for students in K-12 private and parochial schools, and costs related to homeschooling a child. Up to $10,000 per year per child can be distributed for these purposes.
529 plans can be thought of as the rough equivalent of Roth IRAs for education–money goes in after tax, but then grows tax free. Distributions are tax exempt if used for qualified education expenses. If you participate in your home state’s 529 plan (these accounts are mostly run by state agencies), you may be eligible for a state tax deduction.
The fight isn’t over yet, as the House and Senate must decide how to reconcile the differences between their two bills in conference before a final version can end up on the president’s desk.
Click here to read the full article at Forbes and learn more about this big push to support our kid’s futures!