March 2020
College and Tax Planning

Student loan debt has become one of the largest classes of consumer debt in the country. In fact, it affects as many as 45 million Americans. According to a report from Forbes, student loan debt reached almost $1.5 trillion in early 2019, with the average borrower from the class of 2017 owing as much as $28,650 in student debt. For many years, 529 plans have been a great way to help your kids and grandkids with the ever-escalating cost of education. 

Until now, 529 funds could not be used to repay student loan debt. But the SECURE Act opens the door for families to take tax-free 529 plan distributions of as much as $10,000 for student loan repayment. The law includes an aggregate lifetime limit of $10,000 in qualified student loan repayments per 529 plan beneficiary and, very significantly, an additional $10,000 per each of the beneficiary’s siblings. Siblings may include brothers, sisters, stepbrothers or stepsisters. A 529 plan account owner can change the beneficiary at any time without tax consequences. Also, you can use their 529 accounts to cover expenses related to any registered apprenticeship program attended by the beneficiary. This includes any additional costs such as fees, equipment, books, and other supplies. 

If you are looking for ways to help plan for your kids and grandkids current college plans or how to help them manage the repayment process, please call us at the office for a review!  If you have questions, please contact us.

MARKET UPDATE
FINANCIAL PLANNING
401(k) ALLOCATION
GRAPHIC OF THE MONTH

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