529 plan for private school k-12

**This assumes you are in Louisiana

Keep in mind. It's still not allowable under current State law.

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As you may know, the Tax Cuts and Jobs Act (H.R.1) has been signed into law, and it includes an expansion of the available uses of Internal Revenue Code Section 529 College Savings Plans to allow up to $10,000 of distributions each year for K -12 expenses such as private school tuition. It is important to note that this expansion will require that the Louisiana Legislature amend the current laws regarding the START Saving Program for the funds to be available for K-12 expenses. The current law provides that funds may be withdrawn only for the payment of higher education expenses. This means that the use of funds in a START Saving Program account will not be available for use for any K-12 educational expenses unless the Louisiana Legislature acts to amend the current START laws. The next Louisiana Legislative Session currently scheduled begins on March 12, 2018, and ends June 4, 2018 at 6 p.m.

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That being said, they will probably treat it the same as they do higher education. Each kid will need to have their own account.

Yes, Mississippi. I know you can’t pay for private k-12 with MPACT but you can with MACS (529) as of this year. So, I need to open 2 new 529 accounts then? One for each child? Then, what happens when tuition is due in August? I write one check to the school and just deduct that amount on our taxes the following year? I’m so confused but I feel like it shouldn’t be this difficult to understand.

Thanks! So, am I too late starting this process if I intend to pay for both childrens’ tuition In August? Would I need to make a lump deposit to start out (enough to cover both kids tuition in full) then a monthly contribution from here on after? Is that the norm?

One of the main benefits for the 529 is the tax free growth, so with such a short window you’re not really gonna have enough time to gain that benefit of compounded returns growing tax free. Having said that I think you get a state tax deduction for your MACs contribution so you’ll pick up somewhat of a benefit there over just funding it from your pocket.

Your tax professional or tax software should help you identify what can/can’t be deducted. I’m not positive on that answer but I do know the deduction should be available. As far as risk profile, if you’re planning on using that money pretty soon I wouldn’t be reaching for extra returns. The sooner you need the money the more conservative it should be as a rule of thumb.

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Ok that’s what I thought. Thanks. So, I’ll see more tax benefits later down the road but for the time being I can deduct all contributions to MACS (529) and MPACT when I do my taxes? I mean, either way the new law is a good thing for private school families. I just wish I would have started contributing years ago.

Since I’m trying to make up for lost time, is it better to be a little more aggressive with my allocations for now?

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You cannot deduct contributions on your fed return.

With such a short window, it's risky to be aggressive. If the stock market were to dip or correct, you would be out of money without time to recoup. Make sense?

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You cannot deduct contributions on your fed return.

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According to the state treasury of MS website, it shows it is deductible (for 2018 tax year)

Gotcha.

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Last question....so what’s the best way, as a parent with 2 young kids in private school, to take the most advantage of his new law?

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Open it when they were born.

The 529 works better as a saving vehicle for college, b/c it gives the parent a much longer period to save and take advantage of earnings growth tax free.

You get a small benefit on your state taxes in the short term, but using it in this fashion isn't really going to allow you to be aggressive with your investment strategy.

My advice, decide how much you can afford for both K-12 and college. Put a % in more aggressive funds for college savings and for the K-12 just put it in the guaranteed option.

Does this make sense to you?

If the MPACT is anything like the AL version, they’ll give you that “in state tuition” rate for MS to go towards any higher ed school, public or private.

My parents had the AL version setup for all 4 of us and none of us went to an AL university. We all got the equivalent paid for at LSU or Private U we attended.