Section 529 Plans

Section 529 plans are even better now under the new tax law than they were before, and they were pretty good before. As of 1/1/2018 you can now take out tax free  $10,000 a year per beneficiary to cover tuition expenses for private elementary and secondary schools. Under the old rules you could just take out withdrawals for qualified college expenses. Georgia also gives you a $4,000 tax deduction per child for contributions to the State of Georgia 529 plan. Contributions are not deductible on the federal return but the plan grows tax free and qualified withdrawals are not taxed. The named beneficiary of the 529 plan does not have any legal rights to the funds so you retain control. If you withdraw funds for reasons other than education you are subject to taxes on the earnings plus a 10% penalty. You also have the right to change the beneficiary to another qualifying family member. 529 plans do not have any income, age, or annual contribution limits except for a lifetime contribution limit of $235,000 to $520,000 which varies by state plan. You can also treat a large contribution  as a gift over a 5 year period to fall under the annual gift tax exclusion of $15,000.