By Tim Gorrell, Executive Director, Ohio Tuition Trust Authority
November 5, 2019
We owe much to our country’s military. On this Veterans Day, let’s express our gratitude to all those who have served and are serving our great nation. There are currently over 19 million veterans in the United States today and over 2 million men and women actively serving in U.S. armed forces, National Guard and reserve armed forces. Many of the freedoms our country enjoys would not be possible without their willingness to serve for the greater good.
One of the well-earned and well-deserved benefits for the fighting men and women of our country is the Post-9/11 GI Bill. Administered by U.S. Department of Veterans Affairs (VA), this federal program assists in transitioning our veterans back to civilian life by paying their higher education expenses—whether undergraduate or graduate school, vocational/training programs, apprenticeships, and flight training. The GI Bill includes 36 months of education benefits: full in-state public school tuition and fees (there is a national maximum rate cap for tuition and fees for attending a private college), monthly housing allowance if a veteran is in school more than half time, and an annual books and supplies stipend.
If service members choose not to use all of these benefits for their own higher education, they can transfer unused GI bill benefits to their dependents, either their spouses or children, to pay for their college or vocational training.
There are many other GI Bill programs to support our veterans’ pursuit of a higher education such as the Montgomery GI Bill Active Duty or Selected Reserve, Yellow Ribbon Program and Tuition Assistance Top-Up. The VA also offers Tutorial Assistance for veterans to cover extra educational coaching.
A 529 plan can supplement this federal education aid. If the Post-9/11 GI Bill benefits are split among multiple dependents, then a 529 plan can help cover the remaining qualified higher education expenses associated with attending a two-year or four-year college, vocational school, and certification programs.
529 plans are a tax-advantaged way to save for a higher education with tax-free earnings and tax-free withdrawals. Some states offer state income tax deductions or credits for 529 contributions. Check out this listing of 529 plans to see which offers a state tax benefit.
If a child, whose parents have been saving in a 529, decides to go to a U.S. military academy, the parents still have access to the 529 funds. While considered a non-qualified withdrawal, they can ask for a 529 plan withdrawal up to the estimated cost of attending the military academy without incurring a 10% federal tax penalty. Only the earnings portion of the withdrawal may be subject to federal, state, and local taxes.
A 529 plan works well with the Post-9/11 GI Bill. To learn more about 529 college savings plans, visit here. Visit VA.gov for more information about the GI Bill education benefits.
About the author:
Tim Gorrell is the executive director of Ohio Tuition Trust Authority. Previously, he served as the director of the Ohio Department of Veteran Services. Colonel Gorrell, who retired from the U.S. Army after serving 31 years, is a highly awarded and decorated military leader. For 30 years, Ohio Tuition Trust Authority has sponsored and administered Ohio’s 529 College Savings Program, CollegeAdvantage. Ohio’s 529 Plan oversees more than 638,000 accounts and over $12.3 billion in assets as of Sept. 30, 2019. Visit CollegeAdvantage.com or call 1-800-AFFORD-IT (233-6734) for more information.