A Q+A on how college savings plans can now be used to pay for private K-12 tuition.
Parents now have another way to save for Christian school tuition—and this one comes with tax benefits.
Thanks to the GOP-led tax reforms, the 529 college savings vehicle—so named for the relevant section of the Internal Revenue Code—can now also be used to save money to pay tuition at any “elementary or secondary public, private, or religious school.”
CT spoke to George Tryfiates, director for government affairs at the Association of Christian Schools International (ACSI), to find out how it works. His office worked for months on this small section of the tax bill by visiting legislators, joining coalitions, and generating almost 9,000 calls to Congress, President Donald Trump, and Vice President Mike Pence from the ACSI community.
How did this come about?
Trump made such a priority of parental choice in education during his campaign that, immediately after his election, people began working on school choice proposals in earnest. All the ideas people have had over the years—education savings accounts, Title 1 portability, tax credit scholarships—got new life. So did expanding the 529 savings accounts.
How does a 529 savings plan work?
The 529 savings plans were created by a federal law but are administered by the states, so the benefits can be twofold—in other words, from both federal and state taxes (depending on the state).
Parents create and put money into a 529 account, which is then invested in stocks and bonds, more like a 403(b) or a 401(k) than a bank savings account. They can select their level of risk: perhaps choosing a plan that invests in higher-risk options with higher rates of return for a child in first grade, then switching to safer options such as bonds as a child …Continue reading…