This legislation will provide an invaluable college savings incentive for moderate income families which is a policy priority for states that administer the plans and provide employers with a fantastic opportunity to help their employees.
Washington, DC (PRWEB) February 11, 2011
The College Savings Plans Network (CSPN) an affiliate of the National Association of State Treasurers (NAST), announced today that Congresswoman Lynn Jenkins, (R-KS) and Congressman Ron Kind, (D-WI) recently introduced legislation in the U.S. House of Representatives that would include 529 plan contributions in the SAVERs tax credit, make permanent the inclusion of computers as a qualified expense, provide for four annual investment direction changes and provide employers with an incentive to contribute to the 529 plans of their employees.
“Families see college as an important investment in a better future for their children. With college costs rising at annual rates well above inflation, it is more important than ever to help families save for their children’s post-secondary education,” Joan Marshall, Chair of CSPN and Executive Director of the College Savings Plans of Maryland said. “A 529 account is a powerful tool for coping with the rising cost of college, and improvements made in this bill will help put a college education within reach for more families.”
The Jenkins/Kind bill makes four important improvements to 529 College Savings Plans:
- Encourages moderate-income families to save for college: This bill would extend the existing SAVERs Credit (which currently applies to only retirement contributions) to contributions made to 529 accounts. This significant change will help encourage more families of moderate income levels to save for their children’s college expenses in 529 accounts. The current SAVERs Credit provides a tax credit of up to $1,000 for an individual filer and $2,000 for those filing jointly. The eligibility for this credit is limited to those with incomes at or below $27,750 for an individual and $55,500 for joint filers for 2010.
- Allows for the purchase of computers: Understanding that a computer is an essential tool for today’s college students, the bill would make permanent the temporary change that allows 529 funds to pay for computers and related equipment. A two-year version of this provision was included in the recently signed American Recovery and Reinvestment Act of 2009.
- Provides greater flexibility to manage investments: Generally, 529 account owners may only adjust their investment allocation once a year, regardless of changes in market conditions or the economy over the course of a year. In light of current economic conditions, the Treasury Department has temporarily allowed two changes per year for 2009. This bill would give families more flexibility to respond to market conditions by making permanent the opportunity to change the investment direction of their 529 plans up to four times a year.
- Allows employers to match contributions of up to $600 per year in the 529 plan of its employees. The employee would be allowed to exclude the employer match from gross income, thus providing a valuable incentive for companies to assist its employees in saving for college.
“Congressmen Jenkins and Kind are to be commended for their support of American families as they strive to save for the future costs of higher education. This legislation will provide an invaluable college savings incentive for moderate income families which is a policy priority for states that administer the plans and provide employers with a fantastic opportunity to help their employees. We are delighted with the leadership that Congressmen Jenkins and Kind have exhibited and look forward to an ongoing partnership with them and their colleagues in Congress as we strive to improve Section 529 plans to help all American families save and use these plans for their children’s higher education expenses.” said Marshall.
About College Savings Plans Network (CSPN)
College Savings Plans Network (CSPN) is a leading voice for Section 529 College Savings Plans, one of the most popular, convenient and tax-advantaged ways to save for college. CSPN is a not-for-profit association affiliated with the National Association of State Treasurers (NAST) that brings together state administrators of 529 savings and prepaid plans as well as their private sector partners. Information that families of all income levels can use to make informed saving decisions is available on CSPN’s Web site, http://www.CollegeSavings.org.