Congress expands Secure Act & 529 Savings Plans


Before discussing the impact of the SECURE Act on 529 Savings Plans, I want to comment briefly on the Coronavirus outbreak and its impact on world markets recently.

As reported, this virus started in China but has spread to some other countries as millions of people travel between countries every day. To date, there is no vaccine for the virus although pharmaceutical companies and government agencies are working diligently to develop one. So, for the time being, we are all urged to be particularly rigorous in washing our hands and taking other preventative measures.

The financial markets have reacted to this situation by selling off, expecting a slowdown in China’s economy and the growing concern to impact consumer spending. I believe that a cautious perspective in the face of this threat is wise but hope that we don’t turn a measured concern into a global panic. Panics are hard to stop once they start and are driven far more by emotion (fear) than by logic. Hopefully the combination of everyone taking precautions and the development of a working vaccine can arrest the spread of this virus soon. Stay informed but don’t panic.

Turning to the SECURE Act — the new tax law passed in late December — there are several provisions included which positively impact 529 Savings Plans. You may recall that these plans were created some years ago to encourage saving for college by allowing people to shelter the income earned in such plans from both federal and state income tax and the distributions to be tax free as long as the funds were used for higher education. A couple of years ago, Congress expanded the program by permitting the funds to be used for any formal education, from pre-kindergarten through graduate school, either public or private. Now, Congress has expanded the program again to permit the use of 529 funds to pay off student debt up to $10,000, and to fund apprenticeships. Also included is a provision that permits the use of funds to pay off the student debt of the beneficiary’s siblings up to $10,000 each. I suggest you read the article in the link below, which describes the changes in some detail.

One of the criticisms of 529 plans has been that money can get trapped in the plan. That is, it cannot be used for education purposes, or is not fully required for that purpose, and will be fully taxed if used for anything else. I believe the changes made more recently address those concerns directly and make these plans far more attractive than was the case previously. Whether you are a parent or a grandparent of children, you may want to take a renewed look at 529 plans. They are a much better and more flexible way of funding almost any level of education than they were initially.



Frederic “Ric” Schilling is a Florida native, born in Jacksonville, Florida. Ric is president and founder of Senior Guardians of America, a local North Florida firm specializing in tax reduction, long term illness planning, asset protection, probate avoidance and life income planning. Ric is a national speaker and advocate on senior issues and has been featured by the Florida Times-Union and WJXT, TV-4 in Jacksonville as an authority on estate planning and retirement issues. Senior Guardians has an A+ rating with the Better Business Bureau and is a member in excellent standing with the National Ethics Association. Ric Schilling is a certified financial fiduciary. You may call Ric at (904) 371-3302 or (888 )891-3381 or visit .

This article is not intended to give tax or legal advice. Securities offered through Center Street Securities, Inc., a registered Broker-Dealer & member FINRA & SIPC. Investment Advisory Services offered through Center Street Advisors, Inc, a SEC Registered Investment Advisor. Schilling and Associates (d/b/a Senior Guardians of America) and CSA are independent of CSS.




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