529 plans allow federal tax-free withdrawals of up to $10,000 per student each year for K-12 tuition expenses. However, those withdrawals can leave families with less for college. This chart shows that starting $10,000 withdrawals at age 9 results in nearly $115,000 less at age 18 – the equivalent of two full years of projected public college costs. Key takeaway: K-12 withdrawals can significantly impact college funds and may result in state tax consequences as well.
* Under New York State law, distributions for K-12 Tuition Expenses will be considered non-qualified withdrawals and will require the recapture of any New York State tax benefits that have accrued on contributions.