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Ballet Talk for Dancers

529 Plan


daugustyn25

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Hi There 

My daughter is very interested in pursuing higher level ballet. The key word being Higher aka Higher Education, which I was enlightened to hear it applies to ballet schools. This is leading me to ask the following questions around the 529 plan and how & where it can be utilized if one was to use it down the road instead of traditional path of collage.

What higher level ballet school accept a 529 in North America?

When does "Higher Education" mean and when does it become useable? Are there age regulations?

Any additional thoughts on what to explore would be appreciated.

Ty,

Dan 

 

 

 

 

 

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You could use it at traditional University with strong ballet programs, like the Butlers, UNCSA, Indiana, Julliard, etc. Heck, based on some of the topics Univ of South Carolina and Mercyhurst seem to be good programs.

As far as using it for "trainee" programs, it all depends if you are willing to take the tax hit on the gain to pay for such a program.  NOTE: I'm not a financial advisor, tax accountant, etc. do not take this as advice.

Our hope... at 19, DD will have 2 years in a "trainee" program, during which I will pay for the minimum to survive. During this period, I want her to take 1 class per semester to continue the Higher Education ball rolling. I want to use 529 money to pay for the 1 class. 

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You can only use a 529 plan (without penalty) at a school that is eligible/participates in US financial aid. So if it doesn’t have a code you can use on FAFSA it isn’t eligible. Vocational schools have to be registered with the government. A lot of overseas universities no longer participate, so even if it is a fully accredited university, if it doesn’t accept FAFSA you can’t use a 529 without penalty. My DD is currently at a prepro school in Europe that is run through a university, one that issues both bachelor’s and master’s degrees, and she can’t use her 529 without paying taxes on the gains (at the income level, not capital gains level, based on parent’s tax brackets) plus a 10% penalty to the federal government and a 2.5% penalty to our state. And you can’t just withdraw the principal and then transfer the gains to another child because every withdrawal is a portion of principal and a portion of interest. It’s outrageous to be treated like we are not using the money for its intended purpose just because the university doesn’t participate in the US financial aid program.

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I looked at the list of participating institutions by googling 529 and ballet, and the only ballet school in the US was Joffrey NYC.  There was also a contemporary school in the UK.  And of course US universities with dance programs. I wish other schools would look into qualifying for 529s. 

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I think it must be onerous to comply with the federal financial aid rules, as more and more international universities have become Deferment Only. When I started 529s for my daughters I assumed they would be able to use them at any accredited university, but unfortunately it isn’t related in any way to how good the school is at providing a great education. I can understand the U.S. not wanting to use its funds to support an international school, but punishing parents for using their own is insane. If I had invested that money in an ordinary mutual fund instead of a 529 I’d only be paying capital gains taxes on the growth and not income taxes and penalties. I imagine smaller schools in the U.S. don’t have the administrative support necessary to comply with all the requirements to accept federal financial aid, which is unfortunate for all the parents doing their best to support their children on the path they have chosen.

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  • 4 weeks later...

Good topic for those with younger kids…speak to a financial planner before investing in 529, and UTMA/ guardian accounts are options.  Also you can change the 529 beneficiary to a sibling with no tax issues.  And finally, most who dance professionally do work towards their degree, or at end of career go to college.  So it could be used then.  Just some thoughts on 529s….

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