A series of new laws will go into effect on July 14, expanding how parents can use a state savings plan for K-12 tuition to reforming foster care to dealing with terrorism.
One new law going into effect will allow parents to use funds saved in a Kentucky Education Savings Plan Trust (KESPT) account to pay for K-12 tuition. KESPT is a tax-advantaged 529 savings plan designed to help families invest money for qualified education expenses.
Kentucky House Bill 434 gives parents the option to withdraw up to $10,000 per year from a KESPT account to pay tuition at an elementary or secondary public, private or religious school. Tuition is defined as the quarterly or semester charges imposed to attend an educational institution and required as a condition of enrollment.
“We encourage families to start saving for educational cost while their children are young, and timing is certainly a factor if a family is saving for K-12 tuition,” said David Lawhorn, KESPT program manager. “KESPT offers many advantages for Kentucky residents, and this new law gives families an opportunity to leverage those benefits for many years.”
Kentucky’s 529 plan provides a variety of professionally managed investment options. Not only can earnings grow tax free in a KESPT account, but withdrawals are also tax-free when used to pay for qualified education expenses. An account can be opened online at kysaves.com with $25, or $15 dollars per pay period if using automatic payroll deduction.
Parents also have the option of using KESPT’s eGifting feature to invite grandparents, family and friends to make gifts to a KESPT account for maximum growth potential. Funds may be transferred to another eligible family member if the beneficiary receives a scholarship or doesn’t need to withdraw the full amount saved.
Additionally, KESPT savings are not included in determining Kentucky need-based financial aid for beneficiaries of Kentucky residents who plan to attend college. (Federal and institutional aid programs may take the 529 plan account balance into consideration when determining eligibility, so account owners should check with their preferred institution and refer to the KESPT Plan Disclosure Booklet.)
For more information about KESPT, visit kysaves.com or call toll-free 1-877-598-7878. The plan is managed by TIAA-CREF Tuition Financing, Inc.
That’s just one of the new laws going into effect on July 14, 90 days after the adjournment of the legislature.
To learn more, check out this week’s issue of the Harrodsburg Herald.