Questions about Final Tax Law

[Kalaby]

Hello,

I'm trying to discern what was recently signed into law versus various proposals made in earlier bills from the House and Senate. I was wondering if somebody would be kind enough to clarify what actually passed and was signed into law?

1) Did the Coverdell ESA survive or was it eliminated? If it survived, is it completely unchanged? If not, what changed?

2) Regarding the 529 provision for grades K-12. Is the $10k annual limit on a per child or per family basis? For example, if I have 3 children, can I contribute up to $30,000 annually for their (grades K-12) 529 plans or is the overall limit $10,000 to cover all three children?

Thank you.

Mike Q
New York

[dcandmc]

1) My understanding is that the Coverdell ESA survived unchanged.

2) Are you asking about contributions to a 529 account for K-12 expenses, or distributions from a 529 account for K-12 expenses?

[Kalaby]

Thank you for the response.

For #2, I was wondering about contributions. I guess the related question will be how this will work out with annual contribution limits to a child where you have a separate 529 account that's to be used for college and now a new one dedicated for K-12 related costs.

[dcandmc]

The 529 law does not set any specific limits on contributions. Individual plans may stop accepting contributions once the account balance reaches a certain amount set by the plan, and there are gift tax implications for any person contributing more than the annual gift tax exclusion amount to any one beneficiary ($15,000 for 2018, and 529s have a five year gift spreading option).

The new $10,000 limit is for 529 distributions that are used for K-12 expenses, and it's per student on an annual basis.

[Kalaby]

Thank you very much for that information - it's extremely helpful!