Delaplane: 529s face challenging period

Listen to an interview with James Delaplane conducted by InvestmentNews deputy editor Evan Cooper.

The Section 529 college savings plan industry will face “a period of challenge” in Washington this year, according to veteran industry consultant James Delaplane, an attorney based in the capital. As a result of the economic crisis, lawmakers will be looking for ways to raise revenue and will not be predisposed to giving the industry desired incentives like a federal tax deduction, the attorney for Washington-based Davis & Hartman LLP said in an address at the College Savings Foundation’s annual conference in Miami, Fla. this morning. What’s more, lawmakers and regulators are beginning to look into target date and age-based mutual funds, which are among the most popular products sold by the 529 industry, Mr. Delaplane and his Davis & Hartman colleague, attorney Randy Hardock, said during the presentation. But Mr. Delaplane also had some good news for the college savings plan industry. Computers are likely to be designated as a qualified educational expense in the massive stimulus bill passed by the House and headed to the Senate Monday, and recent changes to Internal Revenue Service rules allowing more than one investment change in a 529 plan per year are likely to become permanent.