House bill seeks improvements to 529 college savings plans

Unlimited investment changes among the enhancements lawmakers seeking in new measure

Jan 17, 2017 @ 2:58 pm

By Liz Skinner

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.

(More: Is your 529 plan one of the six that Morningstar just downgraded?)

“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.

(More: Advisers to start recommending ABLE plans to clients)

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.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Financial health of advisory firms is excellent. Or is it?

Deputy editor Bob Hordt and senior columnist Jeff Benjamin discuss the fact that double-digit growth in revenue and assets doesn't necessarily spell a rosy future.

Latest news & opinion

Don't be fooled by the numbers — the industry is in a dangerously vulnerable state

Last year's stock market gains helped advisers turn in solid growth in assets and revenue, but that growth could disappear in the next market downturn.

Divided we stand: How financial advisers view President Trump

InvestmentNews poll finds 49.2% approve of his performance, while 46.7% disapprove. How has that changed over the course of his presidency?

Ex-Wells Fargo brokers sue for damages, claiming they lost business in wake of scandals

In a Finra arbitration complaint, two brokers allege that Wells Fargo's problems damaged their business.

Invesco to buy OppenheimerFunds

Deal brings Invesco another $246 billion in assets, as well as high-fee actively managed funds.

Dawn Bennett found guilty of $20 million Ponzi scheme

Jury took less than five hours to convict the former financial adviser and radio host.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print