I am a grandparent funding a grand childs K-12 private school. My state VT has yet to clarify if its state position on using 529 for K-12 education. Our states 529 plan director in has testified to a state committee about the issue however there has been no changes in state statute.
Our statute does not explicitly say it must be used at the post secondary level of education, however our state span advisor VHEIP has issued modifications to the definitions in our state plan that go on to say that the state “may” recapture credits.
Its changes can be found here.
Its a $500 annual benefit if we can use the state tax credits for contributions.
Given the lack of clarity and guidance should risk a state audit and go for it and “lead the pack”?
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If any of your grandchildren has any chance of getting into college, I would not risk it until the dust settles. Make contributions to qualify for the $500 state tax credit and leave it there to pay for college (like you probably were in previous years). Once the state tax office has had to rule on it - say after next year -, then you can adjust your strategy. But at least you won’t risk losing that $500 tax credit and risk an audit for it.
Or at the very least wait for as long as possible before using funds from 529 plan to pay for K-12 education until they clarify the situation, hopefully later this year. I just don’t see any benefit in leading the pack, only potential downsides.
Agreed, use it for college. No risk there. Yo’d max the state tax credit either way.