As of July 14, Kentucky will join the states allowing parents to use funds saved in a 529 savings plan to pay for K-12 tuition.
Kentucky lawmakers amended house bill 434 to conform with the new tax law, which allows for expanded use of 529 account funds.
The new law will allow parents to withdraw up to $10,000 per year from a Kentucky Education Savings Plan Trust (KESPT) account, the state’s 529 savings plan, to pay tuition at an elementary or secondary public, private or religious school.
Tuition is defined as the quarterly or semester charges imposed to attend an educational institution and required as a condition of enrollment.
“We encourage families to start saving for educational cost while their children are young, and timing is certainly a factor if a family is saving for K-12 tuition,” said David Lawhorn, KESPT program manager, in a statement. “KESPT offers many advantages for Kentucky residents, and this new law gives families an opportunity to leverage those benefits for many years.”
Parents also have the option of using KESPT’s eGifting feature to invite grandparents, family and friends to make gifts to a KESPT account for maximum growth potential.
As it stands now, 32 states consider K-12 a qualified 529 plan expense — with Alabama and Kentucky being the latest ones to jump on board, bringing the number to 34.