Updated Thoughts on the 529 Program Changes for our Lutheran Schools

Back in January, we outlined the changes coming to the 529 plans, including the change that withdraws up to $10,000 per year are also eligible for K-12 educational expenses at private and religious schools, including our area Lutheran schools and Concordia Lutheran High School. Screen Shot 2018 10 21 at 10 41 34 PM 300x296 Since that article, Indiana has modified things just a bit: The K-12 school to benefit from your 529 plan must be in Indiana In 2018, 10% of total contributions up to $500 can be for K-12 education, then in 2019, the deduction can be the full 20% up to $1,000 Reminder that in Indiana, the state tax credit cannot exceed $1,000 per family and is nonrefundable. You can see a more technical description with this Baden Article where they remind everyone that in Indiana, the state tax credit cannot exceed $1,000 per family per year and is nonrefundable.So, how can K-12 schools promote and benefit from the enhanced 529 plans? The points listed last time are still valid: Promote saving, as early as possible: wanting to send your newborn to a Lutheran school but worried about elementary school tuition? Or, do you have your K-8 costs managed, but wonder how you can afford to send Johnny to a Christ-centered high school? Start adding “Gifts to the 529” to everyone’s Christmas lists as soon as possible. The sooner you start saving, the greater the benefit from tax-free compounding interest. According to Indiana’s plan FAQ, while you cannot create a 529 account for an unborn child, you can create an account, name yourself as beneficiary, but later change the beneficiary to a future child. In Indiana, there is not a waiting period between donations and withdraws as long as the 529 account stays open for at least a year from the initial deposit date. How many other ways are there for grandparents to directly impact the education of Little Sally than helping fund their 529 plan, grow tax-free, and receive a 20% state tax credit in return?! Families pay for tuition, anyway… why not plan accordingly and receive a state tax benefit?Catch the Lutheran Spirit, save for K-12 and college education, and utilize all your options, including the SGO Program.