529 savings plans for lower ed proposed

Federal legislation has been proposed that would allow a popular college savings program to be expanded to cover the education costs of children attending kindergarten through high school. Rep. Ann Marie Buerkle, R-N.Y., introduced a measure this month that would allow Section 529 college savings plans to be used for elementary and secondary-education expenses, too. Currently, the programs, which are sponsored by states and named after the Internal Revenue Service code that created them, apply only to tuition and other expenses for higher education. The likelihood that the bill, HR 5932, will become law is small, experts said. The proposal, however, could become part of a broader measure to modify 529 plan rules that could be folded into comprehensive tax reform, possibly by the end of the year, said Joe Hurley, president of Savingforcollege.com. Other measures that have been proposed to change 529 plans would make computers and other technology an eligible education expense and allow for investment changes to be made more often. With 529 plans, participants choose from certain investment portfolios, and the funds grow tax-free as long as when they are withdrawn, they are spent on higher education. Nationally, there's $158 billion in about 10 million 529 plan accounts, according to Financial Research Corp. In 2002, Coverdell education savings accounts were expanded to allow for K-12 education expenses, though that change is set to expire at the end of this year.