News & Press Releases
More Uses for Your 529 Plan: SECURE Act Changes
Congress has passed the SECURE Act which was signed into law on December 20, 2019 and features important federal changes expanding the use of 529 plans. The Act makes changes to IRS Code § 529 by expanding the definition of Qualified Higher Education Expenses (QHEE) for 529 plans and is effective for distributions made after December 31, 2018.
The definition of 529 plan QHEE will include expenses for fees, books, supplies, and equipment required for the participation of a designated beneficiary in an apprenticeship program registered and certified with the Secretary of Labor under the National Apprenticeship Act.
The definition of 529 plan QHEE is also expanded to include amounts of repaid principal and interest on any qualified education loan of either a 529 plan designated beneficiary or a sibling of the designated beneficiary. To be a qualified expense, the loan repayment amount for an individual is subject to a lifetime limit of $10,000.
Expenses for apprenticeships and the repayment of student loans are State and federal income tax free.*
These changes are effective for plan distributions beginning 2019.
*State tax treatment of withdrawals for apprenticeship program expenses and the repayment of student loans is determined by the state where you file state income tax. If you are not a Connecticut taxpayer, please consult with a tax advisor.