Tax-advantaged savings plans, like the MOST 529 are traditionally thought of as a 401k for college savings. However, recent changes to federal law are expanding the 529 savings program.
Beginning in the 2018 tax year, Missouri families will be able to better utilize this savings program.
That’s right! Missouri taxpayers can use MOST 529 assets to pay for K-12 tuition up to $10,000 per year, per student without state tax consequences in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.
State tax treatment of K–12 withdrawals is determined by the state where the taxpayer files state income tax. Please consult with a tax advisor for your individual situation.
Investing for K-12 goals
If you’re using a MOST 529 to pay for K-12 tuition, you’ll need to consider when you’ll need the money. Is your goal one year away or less? Or, is your goal more than one year away? The timing of when you’ll need the money can have an impact on the amount of risk you can take with your investment.
Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Non-qualified withdrawals may result in federal income tax and a 10% federal tax penalty on earnings. Please consult with your tax advisor before investing.
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