Outlined below is additional information on affordabililty options.
Under the Tax Cuts and Jobs Act passed in December of 2017, qualified distributions are now allowed of up to $10,000 per year for K-12 tuition at any private school. These plans were designed as a vehicle to fund a college education, and now but there are educational situations where using these funds can be beneficial. For example, perhaps your funding is running ahead of projections for college financing needs and won’t be needed for college or you may have a 529 plan intended for an older sibling that wasn’t used. K-12 private school tuition can be a great use of these funds!
ROTH IRA contributions (not investment returns) can be distributed at any age without penalty. This can be a great way to fund private school tuition as the investment earnings keep growing after withdrawing the original contributions. You should never compromise your future financial security. If you determine that you don’t need to rely on these funds for retirement and you enact proper investment strategies, a Roth IRA can be a great way to help fund your private school education.
Coverdell Education Savings Account
Parents who meet certain income guidelines are eligible to contribute up to $2,000 per year to a Coverdell ESA. Contributions are made from your after-tax income and earnings on those contributions grow tax-free. Distributions from these accounts aren’t taxed if they are used for qualified education expenses such as private school tuition and fees, books, supplies, uniforms, and tutoring.
Dependent Care Flexible Spending Account
If your employer offers a Dependent Care Flexible Spending Account, funds you deposit can be used toward eligible dependent care expenses. Since contributions to a Dependent Care Flexible Spending Account are pre-tax, it can be a great way to save on your overall expenses. Eligible dependent care expenses include afterschool programs, preschool and K-4 tuition, and even summer camps for dependent children under the age of 13. To find out how this might impact your personal situation, make sure to talk to your accountant or financial advisor.
Other Family Assistance
Grandparents and other family members may be willing to help support your student with the gift of tuition. Whether they contribute by directly paying a portion of your student’s tuition or by investing in one of the options outlined above, this can be an invaluable resource for the education of your student.
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