![]() Any withdrawal of earnings from the 529 Plan not used for qualified education expenses are taxed and penalized. This §529 tax-savings strategy is similar to a Roth IRA, except it is intended to be used for education costs instead of retirement.Ĭomplexity arises if your child (or other beneficiary) does not use all the funds held in the 529 account. The accrued earnings are not taxed either if they are used for qualified education expenses. When the money is withdrawn from the 529 Plan, the contributions are not tax again. The 529 account accumulates earnings over time that are not taxed while they are held in the plan account. Then, the account is funded with after-tax dollars. One of the new provisions, effective January 1, 2024, allows you to move some (not all) of unused §529 Plan assets to Roth IRA.Ī “qualified tuition program” (“QTP” OR “529 Plans”) provides valuable tax benefits while providing for your child or other beneficiary’s education.įirst, the 529 Plan account is established for a “designated beneficiary” – this is most often a child (but it does not have to be a child). ![]() The SECURE Act 2.0 further enhanced these provisions, providing dozens of additional retirement planning opportunities. Have you heard about the SECURE Act 2.0? It builds on the original SECURE Act of 2019, which was intended to make it easier for Americans to save for retirement. By Jackie Emert, CPA, MST, Tax Manager and Amy Sandlin, CPA, Tax Senior Manager at Blue & Co. ![]()
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