An investment in knowledge pays the best interest.
by Bob Crawford
Grandpa Bob and baby Joseph
On September 4, 2018, my wife Renee and I, were blessed with our second grandchild, handsome baby Joseph. Although he was 4 weeks early, he was a big 6 pounds 8 ounces and 20 inches in length with a full head of hair and a small cute little dimple appeared whenever he smiles.
Of course we wanted to begin contributing to his educational opportunities via a 529 saving plan as soon as possible, just like we did with his cousin Nicholas. We know that since 2001, the 529 contributions can be deposited into plan account and that the accumulation of assets would have the possibility to grow income tax free, as long the account funds are used for the benefit of the beneficiaries qualified higher education expenses.
In 2018, the new 529 saving investment accounts allows for special tax treatments on earnings for the payment of qualified higher education expenses, as well as, for children’s primary and secondary education. However, accounts also have various tax constraints for investors to consider as well.
First, it caps the amount of 529 educational expenses for both primary and secondary education expenses at $10,000/year per student.
Second, annual contribution limits for 2018 have been increased from $14,000 to $15,000 for single tax payers and from $28,000 to $30,000 for those married filing jointly. In addition, the five year acceleration option currently in the law has grown from a limit of $70,000 to $75,000 for individuals and $150,000 for couples.
These beneficial 529 plan educational improvements will definitely increase the utility and appeal for baby Joseph’s educational opportunities, as well as enhancing the potential for other families deciding to take advantage of improvements in the 529 saving plans, this year and beyond.
Remember the gift of education through 529 plans was expanded effective January 2018 and may now benefit more family members as well, just like we anticipate it will benefit both of our grandchildren’s future.
I look forward to discussing educational enhancements and how these account improvements can benefit other families with children, and or grandparents with grandchildren.
Cousins Joseph & Nicolas - Already as close as can be.