Planning Strategies Under the Education Provisions of the New Tax Act

Hurley, Joseph F.
September 2001
Journal of Financial Planning;Sep2001, Vol. 14 Issue 9, p116
Academic Journal
This article focuses on the impact of Economic Growth and Tax Relief Reconciliation Act on college planning in the U.S. Tax Relief Act is a significant legislation affecting college savings. Some advantages and drawbacks include: (1.) qualified withdrawals from a state-sponsored tuition program become exempted from income taxes. However, such exemption is applicable only to the extent that qualifying expenses exceed the amount used as the basis for the Hope or Lifetime Learning credit; (2) transaction of same-beneficiary rollover from a 529 plan is allowed. Such would enable participants to exercise some control over their investment in 529 plan; (3) deduction for tuition payment and related expenses for low-income families; (4) increase in the annual contribution cap from $500 to $2,000 a year; and (5) deduction for student loan interest is enhanced.


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