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529 for out of state high school

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  • 529 for out of state high school

    We have a newborn and I plan to open a 529 account by the end of the year. We live in Louisiana, and unfortunately the 529 program here is separate: one for college expenses and one for K-12 expenses. We would get a state tax benefit of $288 if we max the college 529 contribution; there is no tax benefit for the K-12 529. The Louisiana college 529 doesn't allow for K-12 expenses, and you cannot roll over college 529 into the K-12 529. If we utilize the K-12 529, then those funds can be rolled over to the college 529 after kiddo graduates from high school.

    Frankly, I hate the way Louisiana has this set up and I'm exploring using an out of state 529 for flexibility in using the funds for K-12 or college. The $288 tax savings doesn't move the needle for me. We aren't sure if we will send kiddo and future kiddos to public or private high school at the moment, but we would certainly like the ability to use 529 funds if we decide upon private high school.

    My question is: If we open an out of state 529 that allows for K-12 expenses and college expenses (like Utah), would we be able to utilize the funds for a private high school in Louisiana? I've researched a fair amount and I can't get a straight answer.

  • #2
    Go to Vanguard and look at their options. You're right...you may want to use for private school...

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    • #3
      Whether K-12 educational expenses from an out-of-state 529 plan as a Louisiana resident will be tax-free qualified distributions are going to be subject to Louisiana tax codes and the 529 plan rules. Each may but is not required to follow federal tax law.

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      • #4
        The tax benefit are not just the current deduction, it applies to the growth as well.
        SR commented on the out of state issue.
        I seems like K-12 and rolling into the college 529 accomplishes the objective as well. Tax free growth is the fish, the deduction is the bait.
        Catch the fish.

        I found this.
        https://www.savingforcollege.com/529...saving-program

        This seems to indicate La. would allow out of state for K-12 up to $10k per year.
        Last edited by Tim; 10-13-2021, 05:43 AM.

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        • #5
          Hmmm I am confused. I started an LA K12 this year under thoughts that those would be state tax deductible. I'm now getting mixed info from website and other reports including here.

          I'm sending my children to private schools in LA regardless of 529 use or not but figured this would be easier to get state tax deductions.

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          • #6
            This thread is not about using a LA Start K12 529 plan. The OP is specifically asking about using an out-of-state 529 for K-12 expenses.

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            • #7
              It seems as though I can use the Utah 529 for college expenses or K-12 tuition up to $10K per year, even for out of state K-12 tuition. I think that will be the option that I go with. I am contacting the LA START plan to verify that the distribution would be "qualified" and thus tax-exempt. Thanks everyone for their help!

              Damageinc, my research indicates there is no tax deduction for the LA START K12, only the LA START 529 for college expenses. But as Tim mentions, it's the tax free growth that is most important (so you are not taxed on the distribution AKA tuition payment or college expense). I will still use the Utah 529 for the flexibility and simplicity.

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              • #8
                “I've researched a fair amount and I can't get a straight answer.”

                Understatement!
                Deductible ?: Federal , state
                Distribution Tax exempt? Federal, state
                I would fill in the matrix and limits.
                Good luck.

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