Using a 529 Plan to Cover the Cost of Boarding School Tuition
Did you know you can use a 529 plan to help pay for your cadet's education at a boarding school like Missouri Military Academy (MMA)? This tax-advantaged savings tool, traditionally used for college and trade school expenses, can also cover tuition costs at MMA.
What is a 529 Plan?
A 529 plan is a state-sponsored, tax-advantaged savings plan designed to help families save for future educational expenses. There are two types of 529 plans: prepaid tuition plans, which lock in today's tuition rates at participating colleges and universities, and college savings plans, which are investment accounts that can be used to cover qualified expenses at any eligible institution. Contributions to a 529 plan grow federally tax-deferred, and withdrawals are tax-free for eligible educational expenses. In some states, there are also additional benefits for contributing to a 529 plan, such as tax credits or deductions.
Using a 529 Plan for Tuition at MMA
Thanks to the Tax Cuts and Jobs Act of 2017, families can now use their 529 plans to pay for private elementary and secondary school tuition, including at Missouri Military Academy. Families can withdraw up to $10,000 per year per beneficiary to cover tuition costs at MMA. It's important to note that only tuition is eligible for this benefit; other education-related expenses, such as computers or uniforms, must be paid for with non-529 funds.
While the federal government allows for 529 plan withdrawals for private school tuition, some states have not adopted this change. If you live in a state that does not recognize K-12 tuition as a qualified expense, you may owe state income taxes and penalties on withdrawals from your 529 plan. Be sure to check with your state's education agency and 529 plan administrator to find out how 529 withdrawals for private schools are handled in your state.
How to Make a 529 Withdrawal for Tuition at MMA
If you've decided to proceed with using your 529 plan to pay for tuition at Missouri Military Academy, follow these three steps:
- Double-check state regulations to ensure that K-12 tuition is a qualifying expense in your state.
- Contact MMA's financial aid office to explore all available financial aid options, including scholarships and tuition assistance programs.
- Request a withdrawal from your cadet's 529 plan. Depending on the plan, you may be able to submit an online request or you may need to call the plan administrator. You can have the administrator send the money directly to MMA, or you can opt for the money to be sent to the beneficiary or account owner.
Keep in mind that withdrawing money from a 529 plan can have tax implications, so it may be wise to consult with a tax professional before requesting a withdrawal.
A 529 plan can be a valuable tool for parents looking to cover the cost of tuition at Missouri Military Academy for their cadet. By taking advantage of this tax-advantaged savings plan, you can provide your cadet with the benefits of an education at MMA without breaking the bank.