529 advice for private primary school?

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new2bogle2
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529 advice for private primary school?

Post by new2bogle2 »

Based on some reading, it appears Pennsylvania residents can open a 529 in any state. It also appears a 529 can be opened for a young child and money from the 529 can be used for private primary and secondary school. I believe the only gain of this would be to use funding for this education that won’t be taxed by the state.

Can money be put into a new 529 today and used for tuition in the Fall of 2021? Must it be in the account for an extended period of time?

Which state’s 529 should be used as an account that will not be used as a college investment, but will rather be funded only enough to pay that year’s primary school tuition?

If a 529 is opened in one state today, can a new 529 be opened in another state at a later date?
Last edited by new2bogle2 on Tue May 04, 2021 5:17 pm, edited 1 time in total.
DIFAR31
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Re: 529 advice for private primary school?

Post by DIFAR31 »

new2bogle2 wrote: Tue May 04, 2021 5:01 pm Can money be put into a new 529 today and used for tuition in the Fall of 2020?
If the Fall 2020 tuition was paid in 2020, no. A 529 distribution and the payment of the qualified expenses that the distribution is meant to cover must take place in the same calendar year.

Must it be in the account for an extended period of time?
No.

If a 529 is opened in one state today, can a new 529 be opened in another state at a later date?
Yes.
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new2bogle2
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Re: 529 advice for private primary school?

Post by new2bogle2 »

DIFAR31 wrote: Tue May 04, 2021 5:10 pm
new2bogle2 wrote: Tue May 04, 2021 5:01 pm Can money be put into a new 529 today and used for tuition in the Fall of 2020?
If the Fall 2020 tuition was paid in 2020, no. A 529 distribution and the payment of the qualified expenses that the distribution is meant to cover must take place in the same calendar year.
:oops:

I’m embarrassed. I meant Fall 2021 and changed my question above.
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UpsetRaptor
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Re: 529 advice for private primary school?

Post by UpsetRaptor »

If you're just cycling private K-12 tuition money through a 529 to get the state tax deduction (which is fine, up to $10K/kid/year for private K-12 tuition), it really doesn't matter what state/plan you choose, since the funds aren't going to be in there long enough for things like expense ratios to matter. You can contribute $10K (or whatever the annual tuition amount is) and withdraw the next day and claim the state tax deduction for the year. As Difar said, same calendar year as the tuition expenses is the rule.
MrJedi
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Re: 529 advice for private primary school?

Post by MrJedi »

If you are depositing and withdrawing right away, any plan with a cash / money market / etc. fund would work perfectly fine.
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leeks
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Re: 529 advice for private primary school?

Post by leeks »

UpsetRaptor wrote: Tue May 04, 2021 5:21 pm If you're just cycling private K-12 tuition money through a 529 to get the state tax deduction (which is fine, up to $10K/kid/year for private K-12 tuition), it really doesn't matter what state/plan you choose, since the funds aren't going to be in there long enough for things like expense ratios to matter. You can contribute $10K (or whatever the annual tuition amount is) and withdraw the next day and claim the state tax deduction for the year. As Difar said, same calendar year as the tuition expenses is the rule.
I thought you had to contribute to a state's own 529 plan in order to get a state tax benefit. Is that not true anywhere? Or just not in PA?
Scotttheking
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Re: 529 advice for private primary school?

Post by Scotttheking »

leeks wrote: Tue May 04, 2021 7:32 pm
UpsetRaptor wrote: Tue May 04, 2021 5:21 pm If you're just cycling private K-12 tuition money through a 529 to get the state tax deduction (which is fine, up to $10K/kid/year for private K-12 tuition), it really doesn't matter what state/plan you choose, since the funds aren't going to be in there long enough for things like expense ratios to matter. You can contribute $10K (or whatever the annual tuition amount is) and withdraw the next day and claim the state tax deduction for the year. As Difar said, same calendar year as the tuition expenses is the rule.
I thought you had to contribute to a state's own 529 plan in order to get a state tax benefit. Is that not true anywhere? Or just not in PA?
Depends on the state. You need to check the rules for your state.
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new2bogle2
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Re: 529 advice for private primary school?

Post by new2bogle2 »

Scotttheking wrote: Tue May 04, 2021 7:37 pm
leeks wrote: Tue May 04, 2021 7:32 pm
UpsetRaptor wrote: Tue May 04, 2021 5:21 pm If you're just cycling private K-12 tuition money through a 529 to get the state tax deduction (which is fine, up to $10K/kid/year for private K-12 tuition), it really doesn't matter what state/plan you choose, since the funds aren't going to be in there long enough for things like expense ratios to matter. You can contribute $10K (or whatever the annual tuition amount is) and withdraw the next day and claim the state tax deduction for the year. As Difar said, same calendar year as the tuition expenses is the rule.
I thought you had to contribute to a state's own 529 plan in order to get a state tax benefit. Is that not true anywhere? Or just not in PA?
Depends on the state. You need to check the rules for your state.
From my reading it appears all 529s offer exemption from PA state taxes. Can anyone confirm this who might have a personal experience?
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UpsetRaptor
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Re: 529 advice for private primary school?

Post by UpsetRaptor »

Some quick googling should give you your answer, that PA is a "tax parity" 529 state, so contributions to any state plan are deductible at the PA state level. Here's one:
https://www.policygenius.com/blog/a-sta ... 529-plans/
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new2bogle2
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Re: 529 advice for private primary school?

Post by new2bogle2 »

UpsetRaptor wrote: Wed May 05, 2021 11:40 am Some quick googling should give you your answer, that PA is a "tax parity" 529 state, so contributions to any state plan are deductible at the PA state level. Here's one:
https://www.policygenius.com/blog/a-sta ... 529-plans/
Thank you
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new2bogle2
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Re: 529 advice for private primary school?

Post by new2bogle2 »

MrJedi wrote: Tue May 04, 2021 5:36 pm If you are depositing and withdrawing right away, any plan with a cash / money market / etc. fund would work perfectly fine.
Thank you
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new2bogle2
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Re: 529 advice for private primary school?

Post by new2bogle2 »

DIFAR31 wrote: Tue May 04, 2021 5:10 pm
Must it be in the account for an extended period of time?
No.

If a 529 is opened in one state today, can a new 529 be opened in another state at a later date?
Yes.
Thanks for the answers
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new2bogle2
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Re: 529 advice for private primary school?

Post by new2bogle2 »

UpsetRaptor wrote: Tue May 04, 2021 5:21 pm You can contribute $10K (or whatever the annual tuition amount is) and withdraw the next day and claim the state tax deduction for the year.
This is my first time utilizing a 529 and obviously my first time making a contribution and the next day withdrawal.

Will I be able to contribute the exact monthly tuition amount and fully withdraw it? Or will I have to account for any fees of even a few pennies?

Do you know if Pennsylvania or any state’s 529s charge a fee for a low or $0 account balance?
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RickBoglehead
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Re: 529 advice for private primary school?

Post by RickBoglehead »

new2bogle2 wrote: Sun May 16, 2021 6:32 am
UpsetRaptor wrote: Tue May 04, 2021 5:21 pm You can contribute $10K (or whatever the annual tuition amount is) and withdraw the next day and claim the state tax deduction for the year.
This is my first time utilizing a 529 and obviously my first time making a contribution and the next day withdrawal.

Will I be able to contribute the exact monthly tuition amount and fully withdraw it? Or will I have to account for any fees of even a few pennies?

Do you know if Pennsylvania or any state’s 529s charge a fee for a low or $0 account balance?
You should read the rules of any plan you are considering. They are very clear.
Avid user of forums on variety of interests-financial, home brewing, F-150, EV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
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new2bogle2
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Re: 529 advice for private primary school?

Post by new2bogle2 »

:dollar
RickBoglehead wrote: Sun May 16, 2021 6:45 am
new2bogle2 wrote: Sun May 16, 2021 6:32 am
UpsetRaptor wrote: Tue May 04, 2021 5:21 pm You can contribute $10K (or whatever the annual tuition amount is) and withdraw the next day and claim the state tax deduction for the year.
This is my first time utilizing a 529 and obviously my first time making a contribution and the next day withdrawal.

Will I be able to contribute the exact monthly tuition amount and fully withdraw it? Or will I have to account for any fees of even a few pennies?

Do you know if Pennsylvania or any state’s 529s charge a fee for a low or $0 account balance?
You should read the rules of any plan you are considering. They are very clear.
Do you know if these rules can be read before I create an account? The pa 529 website has lots of information but I cannot find their rules. I don’t yet have an account
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