Our oldest is going to kindergarten next year at a private school, and we're going to pay for it from her 529. I'm trying to figure out how to time payments and withdrawals in order to make everything compliant and easy.
I know from this thread (viewtopic.php?t=365353) that the rules are at least somewhat unclear, so I'm mostly interested in what's clear and easy given our facts.
The school has two payment options that we're interested in:
May 1 - 4 percent discount
Aug 1/Jan 1 - 2 percent discount
From prior experience (preschool), I know that they generate two invoices (for half the total) for the May 1 option, one dated May 1 and the other Jan 1. I verified that the whole amount is due May 1, but they have separate invoices for "accounting purposes." I'm slightly concerned that this would make the records more complicated (i.e. require explanation), but I have an email with the clarification above for a prior year. The payment/discount schedule is also pretty clear about that timing being necessary for the discount.
- Prepayment discount. If we pay early to get prepayment discounts, can we reimburse in that same tax year, even though one semester starts the next January?
- Handling Jan 1 due date. If we elect the two payment version (see below), I may want to pay this early, so that it's cleared by Jan 1. Would I also need to withdraw from the 529 in the prior year (to match the payment)? I can float the cash and reimburse, so liquidity isn't an issue.
- Deposit. Can I pay the tuition deposit (which is due earlier than May 1) and reimburse right away (or at least within the same year)? That amount is deducted from the total tuition (as determined by the elected discount/payment schedule) and then the remainder is split into the elected payment schedule.
- Simplest answer. Is it easiest to just pay whenever otherwise makes sense, make sure I withdraw matching amounts (capped at 10k) in the same calendar year, and carry on?
I know from this thread (viewtopic.php?t=365353) that the rules are at least somewhat unclear, so I'm mostly interested in what's clear and easy given our facts.
The school has two payment options that we're interested in:
May 1 - 4 percent discount
Aug 1/Jan 1 - 2 percent discount
From prior experience (preschool), I know that they generate two invoices (for half the total) for the May 1 option, one dated May 1 and the other Jan 1. I verified that the whole amount is due May 1, but they have separate invoices for "accounting purposes." I'm slightly concerned that this would make the records more complicated (i.e. require explanation), but I have an email with the clarification above for a prior year. The payment/discount schedule is also pretty clear about that timing being necessary for the discount.
Statistics: Posted by jtk — Sat Aug 17, 2024 10:29 am — Replies 2 — Views 100