Updated February 2022
College Savings Plans (529 Plans) can provide great tax benefits to people trying to save for their children’s or grandchildren’s college educations. These plans can be set up for just about anybody though – a relative, friend or yourself!
529 Plans already offer the following benefits:
- All Distributions, including earnings (which are considered capital gains), used for qualified higher education expenses are federally tax-free
- Many states offer a deduction or credit on the contributions made to their State-run 529 Plans (here’s a list of each state’s treatment of contributions from Savingforcollege.com)
- Distributions for amounts of up to $10,000 per year per beneficiary for qualified K-12 expenses
Ohio allows a deduction of $4,000 per beneficiary per year.
If you are contributing to a 529 plan be aware that there may be gift tax consequences if your contributions exceed the annual gifting limit of $16,000 per beneficiary starting in 2022. There are ways to gift more in a specific year though – contact us to discuss.
Corrigan Krause Can Help
Make sure you are getting the most benefit from your 529 Plan by connecting with one of the experts at Corrigan Krause. Email firstname.lastname@example.org for more information.