Connecticut Higher Education Trust (CHET) Connecticut State Treasurer

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Important News: Federal legislation includes changes to Section 529 college savings plans

Jul 16, 2018

The federal tax reform bill, which was signed into law on December 22, 2017, includes provisions related to Section 529 college savings plans. Specifically, language in the bill allows distributions used for up to $10,000 of tuition expenses at a public, private or religious elementary, middle, or high school per student per year from all Section 529 college savings plans and rollovers out of 529 college savings plans into Section 529A ABLE accounts to occur free of federal tax.

Note for Connecticut taxpayers: The State of Connecticut’s tax law does not define distributions related to distributions for K-12 tuition as qualified withdrawals. This means that, for Connecticut taxpayers, the earnings portion of any distribution from any 529 plan to pay for tuition expenses at a public, private or religious elementary, middle, or high school, any amount rolled-over from a qualified tuition program to an ABLE account or any portion of the distribution deducted from state taxable income at the time of contribution, will be subject to Connecticut income tax.*

State tax treatment of withdrawals for K-12 tuition expense is determined by the state where you file state income tax. Please consult a qualified tax advisor for further guidance for your particular situation.

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