Raid the College Fund to Pay for K-12 Tuition?
Before you start using your 529 plan to pay private-school tuition, check with your state’s plan.
Until recently, 529 college-savings plans offered tax-free withdrawals only when the money was used for qualified college education expenses. But under the federal tax overhaul enacted at the end of 2017, parents can withdraw up to $10,000 tax-free from a 529 plan each year to pay for private-school tuition for kindergarten through 12th grade.
Before you start using your 529 plan to pay private-school tuition, check with your state’s plan. Although most states conform with federal law, a few, including Illinois, New York and Oregon, have different rules that could result in unexpected taxes and penalties. They typically charge state income tax on the earnings portion of the distribution and require families to return state tax deductions or credits received for contributions.
There are other reasons to think twice about using your 529 plan for precollege expenses. College savings plans work best when your investments have plenty of time to grow. Plus, tapping the account for precollege expenses could leave you with a shortfall for college. Families planning to use 529 funds for K–12 should consider opening a separate 529 account for that purpose. This allows you to track K–12 and college savings separately and pick investment portfolios that match your needs for each.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
The New Rules of RetirementPopular guidelines about how to save, invest and spend need to be updated and personalized to ensure you'll never run out of money.
-
Humanoid Robots Are About to be Put to the TestThe Kiplinger Letter Robot makers are in a full-on sprint to take over factories, warehouses and homes, but lofty visions of rapid adoption are outpacing the technology’s reality.
-
A Value Focus Clips Returns for This Mairs & Power Growth FundRough years for UnitedHealth and Fiserv have weighed on returns for one of our favorite mutual funds.
-
9 Types of Insurance You Probably Don't NeedFinancial Planning If you're paying for these types of insurance, you may be wasting your money. Here's what you need to know.
-
New Ways to Use 529 PlansTax-free withdrawals from 529 plans could help you sharpen your job skills.
-
10 Retirement Tax Plan Moves to Make Before December 31Retirement Taxes Proactively reviewing your health coverage, RMDs and IRAs can lower retirement taxes in 2025 and 2026. Here’s how.
-
Ask the Editor, September 12: Tax Questions on 529 Plan Rollovers to a Roth IRAAsk the Editor In this week's Ask the Editor Q&A, we answer four questions from readers on transferring 529 plan money to a Roth IRA.
-
Money for Your Kids? Three Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's FinancesTax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
-
Amazon Resale: Where Amazon Prime Returns Become Your Online BargainsFeature Amazon Resale products may have some imperfections, but that often leads to wildly discounted prices.
-
Ask the Editor: Reader Questions, April 25 — 529 plans
In our latest Ask the Editor round-up, Joy Taylor, The Kiplinger Tax Letter Editor, answers questions related to 529 plans.
-
457 Plan Contribution Limits for 2026Retirement plans There are higher 457 plan contribution limits in 2026. That's good news for state and local government employees.
