Yes, You Really Can Pay for Private School With 529 Plans Now

NYT ^ | DEC. 21, 2017 | RON LIEBER

[GonzoII]

So it actually happened.

Just last month, it was not certain that the Senate would go along with the House of Representatives’ proposal to let families use 529 college savings plans to pay for private school from elementary school onward. In a bill that offered many perks for the wealthy, the 529 provision was a particularly brazen giveaway.

After all, it’s mostly wealthier people who can save enough to reap large benefits from the provision, which allows $10,000 in annual tax-free 529 account withdrawals for pre-college students starting in 2018.

But it really did happen, and President Trump will soon sign the bill that makes it the law of the land.

The short-term opportunities for affluent families are potentially worth five figures. The schools, however, will now confront a major financial aid question that the new bill forces on them. And states could make offsetting tax changes that cost 529 savers money. Any eventual populist blowback could threaten the plans, too.

But let’s start with the good news, for those who have the money and the inclination. With 529 plans, you put money in, let it grow for years in mutual funds and then pull it out to use for higher education expenses. When you do, you don’t pay capital gains taxes on what you’ve earned over time.

[Nateman]

This might be fake news. I know the RATS made them strip out someything like this because it required 60 votes to get it.That’s why it had to go back to House with this striped out.

[Revolutionary]

The home schooling portion of this was stripped.

[Nateman]

Cruz: 'Shameful' for Democrats to Cut Homeschoolers Out of Tax Bill

[surroundedbyblue]

We have a 529 for each of our children. And no we aren’t rich. I am so sick to death of the class warfare in this country. My husband works very hard for what we have and I don’t own anybody a damn apology for that.

[af_vet_1981]

After all, it’s mostly wealthier people who can save enough to reap large benefits from the provision, which allows $10,000 in annual tax-free 529 account withdrawals for pre-college students starting in 2018.

This begs the question, "wealthier than whom?"

Without question, families with 529 or Coverdell accounts tend to be at least middle class, with median incomes of $142,400, compared with a median income of $45,100 for other families, according to the GAO. These account holders also have more money saved for retirement, on average, and more assets in general.

These families are not exactly Rockefellers, however. The College Savings Foundation, in a statement opposing the president's plan, pointed out that Strategic Insight, a mutual fund research organization, calculates that close to 10 percent of 529 accounts are held by households with incomes under $50,000, and 70 percent of the accounts belong to households with less than $150,000 in income. Nearly 95 percent of the households have incomes under $250,000.

[gov_bean_ counter]

Did anybody happen to define “middle class” this time around?

[Bigg Red]

No, you owe nobody an apology. I am also sick of the left’s class warfare strategy.

[KarlInOhio]

Only the gain is tax free. So if you start spending the money on private kindergarten you forgo more than a decade of growth. If anything this might increase taxes because of less untaxed money being spent on college.

[jdsteel]

I was hoping for a line from the actual bill that confirms this claim. Alas, this is the NYT and no such basic level of reporting applies. I called a mutual fund company I deal with and so far they are unaware of any changes to 529 plans in the new bill.

[Chauncey Gardiner]

So much the democrats can be hung on in 2018. This provision being one.

[Kid Shelleen]

I think this is the news item you are referencing.

To sum this up, Bernie Sanders wanted to embarrass the GOP so he targeted a college that benefits people at the lower end of the income scale, knowing it would create a very temporary bump in the road and a few snarky headlines. Well done, socialist champion of the people!

Bernie Sanders Targeted A College For Needy Students To Embarrass The GOP For A Few Hours

[Qwackertoo]

Bingo. Same here. We saved that money. Our choice. And school choice too. No apologies here.

It should be encouraged and not used as a political weapon from the media to feed the have-nots. We pay for their schooling too.

So in effect, we pay twice. So why not let our savings grow and be used for education purposes for our kids? Not just the uber-rich benefit from this. As bad as government run schools have become . . .