529 Changes in the SECURE Act

[remizidae]

The SECURE Act allows 529 plan distributions to be used for student loan payments! There is a lifetime cap of $10k. I can put in an extra $2500 a year to max out my state tax deduction and then immediately withdraw the funds for student loan repayment, and repeat three times before I get to the $10k cap.

Looking at the numbers, it looks like the benefit would be fairly small: a $2500 state tax deduction is only worth around $131 for me. And of course, this would take more effort than simply making the student loan payments from cash. Still, $131 is $131. What do you all think?

Forgive me if there's already a post on this, didn't see one.

[MrUpwardlyMobile]

The SECURE Act allows 529 plan distributions to be used for student loan payments! There is a lifetime cap of $10k. I can put in an extra $2500 a year to max out my state tax deduction and then immediately withdraw the funds for student loan repayment, and repeat three times before I get to the $10k cap.

Looking at the numbers, it looks like the benefit would be fairly small: a $2500 state tax deduction is only worth around $131 for me. And of course, this would take more effort than simply making the student loan payments from cash. Still, $131 is $131. What do you all think?

Forgive me if there's already a post on this, didn't see one.

It’s pretty great sounding.

[Morning Glory]

My state does not allow the deduction if you withdraw money the same year. Some states do so it's worth checking.