In 2017, Congress passed a wide-ranging tax reform bill (H.R. 1) that expanded the approved use of 529 savings plans to include certain public, private or religious K-12 tuition expenses. Distributions of up to $10,000 per beneficiary per year for tuition may now be taken as a qualified expense from a 529 plan.
What changes should I expect to see to my Invest529 account?
There are no additional changes beyond account holders being able to use an Invest529 account for K-12 tuition. The Invest529 Program Description has been updated with this information.
Does Virginia529 offer a separate investment option for K-12 expenses?
Virginia529 offers a wide variety of portfolios to help you reach your savings goals, but at this time has no plans to open a new portfolio option. Age-based portfolio options are designed to coincide with higher education savings timelines and may not be appropriate for K–12 time horizons.
Do I need to open separate accounts for K-12 and college expenses?
It is not required to open separate accounts to use for both K-12 and college purposes, but some savers may consider doing so based on their specific needs.
Are qualified distributions for K-12 tuition expenses taxable?
Qualified distributions for K- 12 tuition expenses are free from Federal and Virginia state taxes. Learn more about the benefit of tax-free earning. You may also consult your tax professional for more information.
How will owning an Invest529 account affect my K-12 school financial aid package?
Financial aid packages for K-12 purpose are typically decided by the individual school. It is best to consult with your public, private or religious K-12 school to determine whether owning a 529 plan will affect your child’s financial aid package for their precollege education.
What records do I keep to show my K-12 distribution is an eligible expense?
As with any 529 plan distribution, it is the account holder’s responsibility to ensure they are keeping adequate records and receipts to provide to the IRS in the event of an audit. Please review the Invest529 Distribution Guide for further information.
If I’m an account holder interested in taking a qualified distribution to pay for K-12 tuition expenses, how do I initiate taking a distribution from my account?
If you are the account holder simply log into your account, click on “Use My Accounts” then “Request a Distribution (Invest529)” to be prompted through the online distribution process. You can also call Virginia529 at 1-888-567-0540 or review the Distribution Guide for instructions.
How long does it take after I contribute money before I can request a distribution from my account?
The funds you are requesting must be in good standing to be processed. Typically, funds in good standing are available for distribution five business days after the contribution is made.
What are the payment and payee options for K-12 distributions?
For K-12 distributions, Virginia529 can provide distributions directly to the K-12 institution. Payments cannot be made to a third-party tuition payment service.
Can I set up automatic payments to schools?
Currently, an automatic payment option to any K-12 or post-secondary higher education institution is not available.
Are my contributions tax deductible?
Virginia529 account owners who are Virginia taxpayers may deduct contributions up to $4,000 per account per year with an unlimited carryforward to future tax years, subject to certain restrictions. Those age 70 and above may deduct the entire amount contributed to a Virginia529 account in one year.
Who is the 1099 issued to at tax return time since my child will be a minor?
If 529 funds go directly to a school or beneficiary, the 1099-Q is issued in the name of child. This includes instances when the beneficiary is a minor.