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529 Changes

From the Desk of Dean S. Mailhes, CFA

529s are state run programs that allow for tax advantaged savings for a child's post-secondary / college / education expenses. The Tax Cuts and Jobs Act of 2017 included a welcomed provision for some parents. Under the federal rules, state 529 programs may now allow withdrawals of up to $10,000 per year for K - 12 private school cost.

While the federal rules allowed the payments, it is up to each state 529 program to decide if, and how, it would allow the K - 12 withdrawals. Louisiana has opted NOT to change its current START 529, but rather to start a new program called START K12. Unlike START the START K12 does not currently allow state tax deductions or matching on deposits. For 2018 only, you may use $10,000 of START money for private school cost. Starting in 2019 any of those cost must come from START K12.

In 2018 parents who have 529 savings should consider that option for private school cost. However, with the lack of deductions, no matching and with the shorter savings period it doesn't seem to make sense to fund START K12. For most the standard START program seems to make more sense.

Hopefully the legislative will review the states 529 situation soon.

-Dean S. Mailhes, CFA