Families with children enrolled at Winchester Thurston School have not begun asking how they can use 529 plans to pay the private school tuition, but administrators at the Shadyside-based private prep school believe that’s only because many of them still have unanswered questions.
“While the new federal tax law has made provisions for families to use 529s for K-12 education, the state of Pennsylvania is still determining how it will treat these withdrawals from a tax perspective,” said Nancy-Rose Netchi, director of marketing and communications at Winchester Thurston School.
“We expect some families may choose to exercise the 529 option if they find it’s beneficial to them after consulting with their tax adviser,” she said. “From our perspective, the new 529 provision simply gives some families an additional vehicle they can use to invest in an independent school education.”
While the federal tax overhaul made withdrawals for K-12 tuition tax-free, 529 plans are administered by states, and not every state law automatically complies with the new rules. The problem is some state legislation specifies that a 529 plan must be used for “higher education,” while other states simply follow the federal code.
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