Knaub & Company, PC

Certified Public Accountants

78 Meadow Village Drive, Suite E

PO Box 161030, Big Sky, MT 59716


Phone:  406-995-6040

Fax:      406-993-2772



May 2018

529 Plans Expanded

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529 Plans Expanded

Another change contained in the recent tax bill is the expansion of what constitutes a qualified withdrawal from a 529 plan for education expenses. Previously designed for higher education only, a 529 plan now allows up to $10,000 in tax-advantaged withdrawals per year per beneficiary for qualified grade school (if your state allows) and high school education expenses.

Tax Deferral

While you can’t deduct contributions made to a 529 plan on your federal tax return, potential earnings accumulate on a tax-deferred basis. The account owner controls distributions, which incur a tax penalty and income taxes if taken for nonqualified events.

Estate Advantage

A 529 is also a nice estate planning tool. That’s because you can make a single-year contribution per person, per beneficiary, of $75,000, free of federal gift tax. You can’t make a gift to the same beneficiary for the next four years if you do this.


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