US Senator Max Baucus Proposes Eliminating
Sunset Provision on 529 Plans
It was the dawn of a new day in Washington and thanks to
US Senator Max Baucus from Montana, College Savings
Plan participants may never see the sunset on the tax benefits of their investment.
On May 24, 2005, Senate Finance Committee Leaders
Baucus and Charles Grassley (IA) introduced legislation
(S.1112) that will make certain tax benefits permanent for families saving for college. Originally enacted in 2001, the favorable tax treatment of 529 plans is set to expire, or sunset, after 2010 without such legislation.
“Higher education is critical to young people’s future and our nation’s economy,” said Senator Baucus. “The Section 529 college savings plan is an easy and safe way for families to save for college.”
“Millions of young people have benefited and are benefiting from these college savings plans,” Baucus added. “I encourage my colleagues to make 529 tax benefits permanent so we can continue to provide millions of American families a safe and economic way to save for college.”
As of December 31, 2004, the College Savings Plan Network reported that there were over 7 million College Savings accounts with nearly $65 billion invested. The average beneficiary’s age is 8 to 9 years old across the country and they’ll be utilizing these assets beyond 2010.
10% over the $61 million on deposit a year ago. In August 2005, the AFCSP Web site also received a face lift. Located at arizona.collegesavings.com, the program site is easily navigable, has a variety of research topics, calculators and forms needed to manage your account.
The legislation would make permanent:
-
Allowing educational institutions to establish prepaid tuition programs.
-
Exempting the entire distribution from tax if used
for qualified higher education expenses.
-
Increasing the amount of room and board that could
be included as qualified higher education expenses.
-
Allowing use of HOPE credit or Lifetime Learning
credit while using the 529 plan exceptions from taxes.
-
Allowing beneficiaries to rollover amounts between
qualified tuition programs every 12 months.
-
Expanding “family” for purposes of rollovers and changes of designated beneficiaries to include first cousins.