Withdrawals from a qualified tuition program
(QTP) account established under section 529 of the Internal Revenue Code (IRC) for kindergarten through 12th grade school tuition, which now qualify under the TCJA, are not qualified withdrawals under the New York 529 college savings account program.
* For qualified tuition program
tax benefits, an eligible educational institution now can be either an elementary, a secondary, or a postsecondary school.
A qualified tuition program
is a program established and maintained by a state (or agency or instrumentality thereof) or by one or more "eligible educational institutions" that meet certain requirements and under which a person may buy tuition credits or certificates on behalf of a designated beneficiary that entitle the beneficiary to a waiver or payment of qualified higher education expenses of the beneficiary (see below).
If you are not a North Dakota taxpayer, consider before investing whether your or the designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program
The Coverdell Education Savings Account (ESA) program and the Qualified Tuition Program
(QTP/529) are similar in many ways.
If a designated beneficiary receives distributions from both an ESA and a qualified tuition program
and the aggregate distributions exceed the "qualified education expenses" of the designated beneficiary, then the expenses must be allocated among such distributions for purposes of determining the amount excludable under each.
"Qualified education expenses" include both "qualified higher education expenses" and "qualified elementary and secondary education expenses." (5) "Qualified higher education expenses" include tuition, fees, costs for books, supplies, and equipment required for the enrollment or attendance of the student at any "eligible educational institution," and amounts contributed to a qualified tuition program
. (6) Room and board (up to a certain amount) is also included if the student is enrolled at least half-time.
Estate planning questionnaires should now include the question: "Are you the Account Owner under a qualified tuition program
(529 Plan) or other education savings account?," and provisions should be made for the designation of one or more contingent account owners in the event the client becomes incapacitated or dies before all funds are distributed from the account.
In addition, the Act also provides tax relief in the areas of distributions from a qualified tuition program
and deductibility of travel expenses for Armed Forces Reserve members.
* If a beneficiary receives distributions from both a Coverdell account and a qualified tuition program
in the same year and the total distributions from both are more than the beneficiary's adjusted qualified higher education expenses, those expenses must be allocated between the two distributions to determine how much of each distribution is taxable.
* Assets in a Qualified Tuition Program
(QTP) can be rolled over or transferred from one QTP to another.
Laws that gave rise to the Qualified Tuition Program
(QTP), aka 529 plan, restrict the type of investments that may be offered by QTP plan administrators such as Merrill Lynch and Alliance Capital.