Last month, US Senators Richard Burr and Bob Casey introduced legislation titled The Boost Saving for College Act. A very limited number of bills are called for a vote, but we’re hopeful this bill is both called and passes. It includes four major provisions that would benefit families saving for college:
- Low- and middle-income families would be able to claim a nonrefundable tax credit of up to $1,000 ($2,000 if filing jointly) as a match to their 529 savings plan contributions. This benefit would be limited to households with incomes at or below $30,750 (single-filer), $46,125 (head-of-household), and $61,500 (joint). This amount would be indexed to inflation.
- Currently, matched contributions count as income to the employee and would be taxed. This legislation would encourage employers to offer 529 plans to their employees. Employers could match up to $1,000 to their employee’s 529, which would be excluded from the employee’s gross income.
- Excess 529 savings could be rolled into a Roth IRA so long as the account has been open a minimum of 10 years. Boost would allow assets to roll into the account owner or beneficiary’s Roth IRA.
- At the moment, families whose beneficiary has developed a disability that might prevent the use of those funds towards higher education have little recourse. Boost would allow families with a disabled child to rollover their 529 account into a 529A – or ABLE – account. For example, this would allow greater flexibility to tap those assets in the event of a discovered or developed disability.
We’ll update progress (or lack thereof) on this bill in future entries.