2 Helpful Ways a Fitness Coach might Use a college savings Plan
"Don’t confuse schooling with education. I didn’t go to Harvard but the people that work for me did.” - Elon Musk
If you are a fitness entrepreneur with existing student loans or are considering continuing your education without attending a traditional 4 year college, new laws might be GREAT NEWS for you!!
Beginning in 2020, the 529 College Savings Plan was expanded to better serve your fitness business.
WHAT IS A 529 PLAN?
A 529 plan is a way to save money for college. As long as funds are used for “qualified education expenses,” the money you contribute into the plan will grow TAX-FREE. Some states even allow a state tax deduction for 529 plan contributions - making them even more beneficial in certain locations. The program got an upgrade in 2018 to allow the savings to be used for tuition expenses at private grade schools and high schools... In 2020, the program received another upgrade!
TWO NEW UPGRADES TO 529 PLANS IN 2020
1- 529S NOW INCLUDE APPRENTICESHIPS & MORE:
While 529 savings accounts could previously only be used to pay for traditional K-12 and 4 year colleges, these funds can now be used for apprenticeship tuition and some credential programs.
In order for 529 plan monies to be eligible to be used for its tuition, an organization must have applied and become eligible for the Federal Student Aid program. The list of eligible schools and programs is much larger than many think. Use one of the search tools below to see if your school or job qualifies:
2 - PAY OFF STUDENT DEBT UP TO $10,000
While there is generally no limit on the amount of 529 plan money that can be used on tuition while the student is in school, as of 2020 up to $10,000 can be withdrawn to pay off existing student loans. $10,000 is a lifetime limit which means that even if multiple family members offer to use their 529 plan to help you, $10,000 is the max you are allowed total.
If you use 529 accounts to pay for student loans, the interest on that portion is no longer eligible for a tax deduction. Speak to your accountant to confirm whether this strategy is beneficial to you.
Please note that these changes are FEDERAL. Meaning that depending on where you live, pulling out 529 money could result in State taxation. Yet another reason it is always a good idea to speak with your accountant or financial planner before making changes to your financial strategy!
CONCLUSION:
If you are a fitness coach or considering a credential program to become one, you should speak with your school to see if a 529 plan can be used to pay for your tuition. If you are already credentialed and carrying student loan debt, perhaps a family member’s 529 plan could be helpful to you.
Best,
Pat
(Disclaimer: This is meant to be educational, and not advice for your specific situation. Please speak to a qualified Financial Professional about your specific situation before making any changes to your education savings strategies.)