529 College Savings Account Updates for 2020
Daniel V. Estenson CFP®, AIF®, Wealth Manager | Posted: January 31, 2020
- 529 College Savings accounts can now be used for student loans
- There is now a lifetime limit of $10,000 that can be taken from 529 college savings accounts to repay qualified education loans1. This includes repayment of either principal or interest for the designated beneficiary of the account or a sibling of the designated beneficiary. This change also allows 529 college savings account owners to use the account for repayment of qualified education loans of any sibling of the designated beneficiary.
The tax-free treatment for the repayment of up to $10,000 of student loans, available due to the SECURE Act, only applies to federal taxes at this point. Taxpayers should be aware that their state’s income taxes may or may not be changed to align with this. It is important to consult with your tax preparer to see how your state Income taxes could be affected before taking a distribution to pay for student loans.
- Wisconsin State Income Tax deduction increased for 2020
- 2019 College Savings Account contribution deadline
Speak with your Wealth Manager if you have any questions about the 529 college savings account changes discussed here or if you are interested in learning more about using 529 college savings accounts for your children or grandchildren.
Prior to investing in a 529 Plan, investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax-free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
About the author
Dan is a Wealth Manager who aims to help clients reach their lifelong goals through retirement income planning, tax minimization strategies, and wealth planning. Dan also helps develop college education funding strategies for our clients, in an effort to reduce the increasing costs of post-secondary education. He lives in Chippewa Falls with his wife, Nicole, and three children. In his free time, Dan enjoys traveling, the outdoors, and spending time with his family.
Certifications, Licenses, and Registrations
- Registered Representative with LPL Financial, Member FINRA/SIPC
- CERTIFIED FINANCIAL PLANNER™ professional
- Accident, Life, Health, and Variable Life/Variable Annuity Insurance Licenses
- Accredited Investment Fiduciary®
Education and Training
- Series 7, 66 held at LPL Financial
- Bachelor's Degree - Accounting; University of Wisconsin - Eau Claire
- College for Financial Planning graduate