529 for private tuition

[Anonymous]

We are new to this. How does it work? How can we set up a 529 and withdraw funds this year for private tuition
Are there real tax benefits?

[Anonymous]

Be careful about your state taxes. Some states tax withdrawals for private K-12 tuition, even though there is no federal tax/penalty on up to 10K per year per kid.
You have to check your state laws--some don't conform to the new federal law.
California, as an example, taxes the earnings portion as regular income and also assesses a 2.5% penalty on early withdrawal. You must take out contributions and earnings on a pro rata basis (so no saying, I'm only taking out the "contribution basis" for tuition.

[Anonymous]

For Virginia, it seems to me that this is allowable - based on the various rules (including Virginia’s $4k deduction per ACCOUNT as opposed to per beneficiary) my interpretation is that you can do the following

Ignoring spouse contributions or parallel accounts, it seems to me that an individual parent could set up the following for an individual child

1. Set up multiple accounts per beneficiary (as long as investment allocation is different)
2. Contribute $4k to each account (subject to overall gift limitations to a single beneficiary)
3. Deduct $4k per account on your Virginia Taxes (so 8, 12, 15k, etc)
5. Withdraw up to $10k in aggregate across accounts for a single child’s private school tuition

Anyone think this is not allowable?

[Anonymous]

I am curious too. Any other suggestions?

[Anonymous]

Anonymous wrote:For Virginia, it seems to me that this is allowable - based on the various rules (including Virginia’s $4k deduction per ACCOUNT as opposed to per beneficiary) my interpretation is that you can do the following

Ignoring spouse contributions or parallel accounts, it seems to me that an individual parent could set up the following for an individual child

1. Set up multiple accounts per beneficiary (as long as investment allocation is different)
2. Contribute $4k to each account (subject to overall gift limitations to a single beneficiary)
3. Deduct $4k per account on your Virginia Taxes (so 8, 12, 15k, etc)
5. Withdraw up to $10k in aggregate across accounts for a single child’s private school tuition

Anyone think this is not allowable?

I am doing this. We used to put ~$1k per month into a 529 plan and ~$3.5k per month into an account we use to pay private school tuition. We now put ~$2k per month into the 529s and $2.5k per month into the account we pay private school tuition out. at the end of each year we will withdraw $10k from the 529 accounts and move it over to the account we pay private school tuition out of. Same monthly budgeting for us, but gets a bigger tax deduction from the larger contribution to the 529 plan.

[Anonymous]

Anonymous wrote:For Virginia, it seems to me that this is allowable - based on the various rules (including Virginia’s $4k deduction per ACCOUNT as opposed to per beneficiary) my interpretation is that you can do the following

Ignoring spouse contributions or parallel accounts, it seems to me that an individual parent could set up the following for an individual child

1. Set up multiple accounts per beneficiary (as long as investment allocation is different)
2. Contribute $4k to each account (subject to overall gift limitations to a single beneficiary)
3. Deduct $4k per account on your Virginia Taxes (so 8, 12, 15k, etc)
5. Withdraw up to $10k in aggregate across accounts for a single child’s private school tuition

Anyone think this is not allowable?

We are doing 1, 2, 3. Not using it for private school.

(What's step 4, anyway?)