Pennsylvania has one of the most generous state tax deductions at $14,000 per person, which amounts to about $430 in tax savings, calculated Chris Cortese, a certified financial planner for Wescott Financial in Philadelphia.
Will states respond to the new tax laws by either capping deductions at lower rates or requiring some kind of holding period? Nobody knows.
"Different states may have different perspectives," said David Williams, executive director of the American Tax & Financial Center at TurboTax.
Ways To Take Advantage
States determine the maximum amount you can aggregate over the lifetime of an account, with the top end at just over $500,000. You cannot put it in all at once, but the plan does allow front-loading, or making five years of contributions in one chunk. That means that a married couple or a pair of grandparents could put up to $140,000 into an account.
If you did that at birth, after five years, you would have about $200,0000, or about $450,000 after 15 years, calculated Levine.
"That would be a point where you could fund the last years of high school, and college," he said.
Not many people are front-loading their 529 accounts, though, Polimeni said. "How many people have $140,000 to put upfront?"
This article was provided by Reuters.