GREENSBORO, N.C. — May 29, also known as 529 Day. This is the day North Carolina, and really states all over the nation try to make you aware of 529 college savings plans.
What is a 529 plan?
It is a tax-advantaged savings plan that you can use for college expenses and K-12 tuition.
When the money is taken out to be used, no taxes are paid on it as income.
You can save for your child, your grandchild, yourself, or any other future student.
Did you know?
Friends and family can contribute directly to the 529 account using a credit card, debit card, or bank transfer as well as Google and Apple Pay.
The IRS is making a big deal about this too, because not only can you pay for tuition and such, but you can also use the money to pay down a student loan, or even a sibling's student loan.
HOW YOU CAN WIN $1,529 TO GO TOWARD YOUR 529 ACCOUNT.
The College Foundation of North Carolina is giving current and new NC 529 account holders an opportunity to win $1,529 towards their accounts. The deadline to enter to win is midnight on May 31, 2023.
You need to ENTER TO WIN.
The benefits of establishing a QTP are
- Earnings accumulate tax-free while in the account.
- The beneficiary doesn't generally have to include the earnings from a QTP as income.
- Distributions aren't taxable when used to pay for qualified higher education expenses (including tuition at an elementary or secondary public, private, or religious school). However, if the amount of a distribution is greater than the beneficiary's qualified higher education expenses (including tuition at an elementary or secondary public, private, or religious school), a portion of the earnings is taxable.
- Amounts can be withdrawn to pay principal or interest on a designated beneficiary's or their sibling's student loan. The amount of distributions for loan repayments of any individual is limited to a $10,000 lifetime. Interest paid with these funds doesn't qualify for the student loan interest deduction.
Soon, you'll be able to do more with 529 money.
“There is also a big change that makes 529 plans even more appealing. Last year's Secure Act 2.0 made it possible for unused 529 funds to be transferred to a Roth IRA account, without any taxes or penalties,” said Jill Schlessinger, CBS News Business Analyst.
The new rule takes effect in 2024. To transfer to a Roth IRA, the 529 account must have existed for at least 15 years.
You can only transfer a lifetime maximum of $35,000.
Transfers are subject to annual Roth IRA contribution limits.