topic Re: 529 pa in Retirement tax questions

529 pa

jad56061 — Wed, 11 Feb 2026 09:52:35 GMT

If my parents open a 529 for my nephew in pa, will they get a tax deduction? Will that affect his fafsa? He currently lives in VA. Can you transfer from PA to VA no problem if they stay in Virginia?

Re: 529 pa

K M W — Wed, 26 Jun 2024 18:57:24 GMT

There is not a federal tax benefit for contributing to a 529 plan - the benefit of contributing to a 529 plan is that any earnings generated are tax free if the funds are used for qualifying educational purposes.

With that being said, some states do have deductions on the state income tax return for contributions made to their state's 529 plan. I am not sure what state your parents are residents of - but you mentioned Virginia, so I am thinking your parents may reside in Virginia. if that's the case, Virginia 529 account holders who are Virginia taxpayers may deduct contributions up to $4,000 per account per year, with an unlimited carryforward to future tax years, subject to certain restrictions. Note the beneficiary does NOT have to be a Virginia resident, nor does the beneficiary have to attend a college in Virginia.

As for if their contributions would impact FAFSA, I cannot comment on that as it is not an income tax question. I would recommend contacting the financial aid office of the college to ask that question.

Re: 529 pa

jad56061 — Wed, 26 Jun 2024 20:56:45 GMT

So my parents live in PA and if they open a 529 for my nephew in PA, would that help their tax state deduction in pa?

Re: 529 pa

K M W — Wed, 26 Jun 2024 21:07:35 GMT

Under current laws, Pennsylvania allows contributions to Section 529 Tuition Savings Accounts to be claimed as a deduction. Pennsylvania taxpayers can deduct up to $18,000 in contributions per beneficiary per year ($36,000 if married filing jointly, assuming each spouse had income of at least $18,000) from their Pennsylvania taxable income for the purposes of determining their state income taxes.

Re: 529 pa

jad56061 — Wed, 26 Jun 2024 22:08:40 GMT

Ahh so they can claim a tax deduction on this?

Re: 529 pa

K M W — Thu, 27 Jun 2024 12:09:50 GMT

If they are PA residents, then yes, they can deduct a contribution to a 529 plan with their nephew as beneficiary on their PA state return, within the limitations listed in the prior post.