A bipartisan bill has been introduced in the House to make it easier to save money in 529 college savings plans and accounts aimed at helping families with special needs children.
HR 529, sponsored by Rep. Lynn Jenkins, R-Kan., and Rep. Ron Kind, D-Wisc., would encourage companies to help employees start up either of these accounts and contribute to the plans by offering businesses tax incentives to do so. It also would remove limits on the number of times per year investments in the accounts can be changed, which currently stands at twice a year.
Funds saved in 529 college savings plans, which are named after the Internal Revenue Service code that created them, could be used to pay back student loans or be donated to charity without tax consequences, under the proposed bill.
“This bipartisan, common-sense bill will continue to strengthen 529 plans, an increasingly popular college savings plan, so all students will have the opportunity to continue their education and achieve their dreams,” Ms. Jenkins said.
About $266 billion is invested in 529 college accounts, according to the College Savings Plans Network. With 529 plans, investments made in the accounts grow tax free as long as the money is used for college expenses.
ABLE accounts, similarly structured plans that are aimed at helping families save money to care for children with special needs, were first introduced over the summer and 10 states are now making them available, according to the ABLE National Resource Center.
About $4 million had been invested in about 1,934 ABLE accounts through Sept. 30, according to Strategic Insight.
Ten more states are due to begin offering the plans by the end of March, the group said.
The 529 accounts for college savings were created in 1996.
“With more than 12 million accounts open, 529 college savings plans have been a powerful tool to help American families cope with the rising cost of college and avoid being saddled with student loan debt,” said Young Boozer, Alabama state treasurer and chair of the CSPN.
The bill, which was introduced on Friday, has been referred to the House Committee on Ways and Means.