First off, what is a 529 plan? A 529 plan is an education savings account to which parents–or whomever–can EDM – Bills 01 – Image courtesy of David Costillo Dominici at FreeDigitalPhoto.netcontribute money to cover the future college costs of a child, grandchild, etc–regardless of age (newborn or older). Congress created this qualified tuition program in 1996, and it’s named after section 529 of the Internal Revenue Code.
You can have multiple 529 plans in multiple states. You can open an account in NC with a minimum of $25
Taxpayers who contributed to NC 529 plans were previously able to deduct those contributions on their NC state tax returns. However, beginning with 2014, they are no longer tax deductible. This is due to tax code and budget revisions by lawmakers. Although lawmakers have eliminated multiple tax credits, they attempted to offset these eliminations by cutting the individual tax rate. The intention being the individual tax rate cut will more than make up for the loss of the 529 and other tax credits and deductions.
As far as the tax deduction benefit, there is therefore no longer such a benefit in NC; however, this doesn’t mean one may not want to contribute to a college savings plan. If you would like more information on the best retirement and/or college savings plans, E. Daniel Miller, CPA, PC can point you to the right person who will provide a free initial consultation. Please feel free to reach out to us at (888) 734-3933 or tax@edanielmillercpa.com.
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