529 Plans: Is Florida’s State Sponsored Plan The Only Exempt 529 Plan For Florida Resdients?

One of my clients was very concerned about the exemption of 529 plans in Florida. The client’s financial planning involved significant contributions of money each year into 529 plans for his young children. The client established the plans in Illinois where he and his wife had lived before moving to Florida. The 529 plan was sponsored by the State of Illinois. The client had read that Florida law exempts only plans sponsored by the State of Florida. He wanted to know if he had to transfer his Illinois 529 plan to the Florida plan to preserve its protection.

Let’s look at the Statute. Florida Statute 222.22(1) exempts from attachment, levy, garnishment or legal process moneys paid into or out of, … and the income of any validly existing tuition program under Section 529 of the Internal Revenue Code “including, but not limited to,” the Florida Prepaid College Trust Fund. In other words, any college tuition program authorized by the tax code is exempt for Florida residents. It seems the statute is clear, so what did the client read that made him uncertain. What he read was the old statute. Prior to 2005 the statute exempted, “moneys paid into or out of the Florida Prepaid College Trust Fund.” The prior statute did not reference Section 529 of the tax code and did not exempt any 529 plans other than the Florida plan. Today, all qualifying 529 plans are exempt for Florida residents.

Last updated on May 22, 2020

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