Attention parents and grandparents: Sometime soon, we’re likely to have a WA 529 Plan for college savings. This week, the Washington State legislature unanimously approved creation of the state’s first-ever 529 Plan, with Governor Inslee expected to sign off by end of March.

A 529 Plan is funded with after-tax dollars that go into a set group of mutual funds, withdrawals from which are tax-free if the money is used to pay for most colleges in the U.S. and many abroad.

In addition to the tax break, there’s another major plus to saving for college through 529 Plans:

Once you open a 529 Plan, you can front-load five years’ worth of funding — up to $70,000 per sponsor or $140,000 for wife and husband sponsors — and still stay within the annual gift-tax exemption. Why? The annual gift-tax exemption is currently $14,000 from each donor to each recipient. For a husband and wife, that means $28,000 annually per recipient. Over five years, this adds up to $140,000.

What this means: Every five years, married couples can front-load up to a maximum of $140,000 into a tax-advantaged 529 Plan for any college-bound beneficiary, while retaining the option to change the designated beneficiary at any time. Money can stay in a 520 Plan indefinitely; there are no mandatory withdrawal requirements. If the money is withdrawn and not used to pay for college, there’s a 10% penalty on the proceeds plus taxes on the income and capital gains (not the principle).

What about GET?

WA state residents will also still be able to pay tuition in advance through WA State’s Guaranteed Education Tuition plan, or GET, when that plan reopens. The Seattle Times reports that legislation passed this week stipulates that GET must open again to new investments by July 2017.

For WA residents who already have money in GET, it will be possible to transfer money — perhaps as easily as clicking a button or two on the GET website — into the new WA 529 Plan.

WA 529 Plan: What’s Next

We’ll keep you posted on which major mutual fund company WA state partners with to provide its 529 Plan investment options. You can then compare the WA 529 with plans sponsored by other states, which will continue to be open to WA state residents.

Get the scoop on the major ways to save for college in this LNWM blog post.