Families Can Now Pay Tuition with 529 Plan Funds
The new federal Tax Cuts and Jobs Act signed into law in December allows families to withdraw funds from a tax-advantaged 529 education savings plan to pay for K-12 education expenses, including private school tuition,for the beneficiary named in the account. Previously, 529 plans could only be used to pay for higher education expenses.
Families can distribute up to $10,000 per student annually from the 529 plan designated for that student.
State law also allows eligible Missouri residents to deduct up to $8,000 of contributions for an individual and $16,000 of contributions for couples from their Missouri income taxes (not federal) for contributions to a 529 plan. Contributions made to the Missouri MOST 529 plan or any other state’s 529 plan are eligible for the deduction. The deduction is available for any taxpayer (parent, grandparent, or anyone else contributing for a child) as long as they are a Missouri resident.
Using 529 plans with FACTS Tuition Payment System
529 plans are not ACH compatible and can’t be used as the designated financial account for automatic tuition payments in FACTS. However, families have a few options to use funds from their 529 plan to pay for their child’s tuition.
Families can have their 529 funds transferred electronically into their personal checking or savings account. FACTS will automatically debit their account per the previously agreed upon payment plan.
Families can request a physical check, made out to the account holder or student beneficiary, from their 529 plan financial institution. Families will then need to deposit the 529 funds into their personal checking or savings account. FACTS will automatically debit their account per the previously agreed upon payment plan.
Families can request a physical check, made out directly to Columbia Independent School, from their 529 plan financial institution. In this scenario, families will then need to submit the physical check to CIS to apply to their FACTS account for them.
You should consult your tax advisor for guidance regarding eligibility and your specific tax situation. CIS does not recommend or advise families regarding financial and tax decisions.