Important News: Federal legislation signed by President Trump includes changes to Section 529 college savings plans.
The tax plan signed into law on December 22, 2017 by President Trump includes provisions related to 529 college savings plans. Language in the bill includes the expansion of qualified education expenses in Section 529 of the Internal Revenue Code to include expenses for K-12 as well as other provisions.
Regarding the Georgia path2college 529 plan, the following language can be found on the website:
These are untaxed and include any withdrawals that will be used to cover Qualified Higher Education Expenses for the student at an Eligible Educational Institution. The student must be enrolled for at least half-time for room and board expenses. Recently enacted legislation provides that beginning in 2018, qualified higher education expenses also includes tuition expenses of up to $10,000 per year per beneficiary in connection with enrollment and attendance at an elementary or secondary public, private or religious school.
In other words, there are no tax implications for Georgians who wish to use up to $10,000 per year for tuition expenses only from their path2college 529 plan for primary education at KHCS!
We consulted a tax expert who stated, “Georgia follows IRS.” Also, she referred me to the following article which documents that Georgia, along with several other states, have followed suit with the new federal law: click here to read article
For grandparents there is a nuance around the gifting law: The tax expert stated, “Also, if you pay the tuition directly to the school for your grandchildren, such payments are not considered ‘gifts’ for gift tax purposes. Contributions from you to 529 plans for your grandchildren are ‘gifts’ to them. To the extent that your total annual gifts (including 529 plan contributions) to each grandchild exceeds $15,000 per year for each you and your spouse, you should file a gift tax return. And, the excess over $15,000 ($30,000 combined for joint married) per grandchild will use up part of your lifetime exemption. That exemption is now about $11 million for each spouse. It is scheduled to be reduced by half again in 2026.”
We hope this helps you as you look to enrollment in 2018 and beyond! Feel free to call me with any questions.
770-921-3224 ext. 106