IRS Makes It Easier to Save For College with 529 Plans
January 21, 2009 by Lela Davidson
Filed under Finance
The IRS announced early this month a change that makes it easier to roll over existing 529 Plan accounts into different investments or tuition plans. Owners of 529 accounts are now permitted two investment fund changes per year, as opposed to only one in the past.
The change was made in response to a call for more flexibility in 529 plans. Industry experts want to ensure that 529 accounts remain an attractive option despite the floundering financial markets. This could be especially important to parents who already made changes to their 529 savings plan during the past tumultuous year. They now have an extra opportunity to remove funds from stock market volatility by rolling over into a 529 plan.
“By allowing owners of 529 plans the ability to change funds or allocations more than once per year, the entire 529 category becomes more attractive to those looking to secure their children’s future college tuition,” said Andrew Davis, executive director of the Illinois Student Assistance Commission. He also stated that these plans offer much needed security and peace of mind, since the struggling stock market.
The College Savings Plans Network (CSPN) is currently working with the Treasury and IRS in an effort to make this revised ruling permanent beyond 2009.
“We appreciate the steps the Treasury and IRS have taken to give 529 plan participants more flexibility when it comes to changing the direction of their account investments in 2009,” said Jackie Williams, executive director of the Ohio Tuition Trust Authority and immediate past chair and spokesperson for CSPN. “We also look forward to working with these agencies to provide 529 plan participants with continued flexibility and additional improvements that will make 529 plans even easier for American families to use as they save for their children’s higher education expenses.”
Under the 529 guidelines, taxpayers deduct up to $10,000 per individual or $20,000 for married couples filing jointly, and all plan earnings are exempt from state and federal tax exemptions as well. For more information about CSPN and 529 college savings plans, go to http://www.collegesavings.org/.
Image Credit: iLoveButter, Flickr
I think that this is positive news. We need to make college more affordable. There are a lot of young students out there that are missing out on great opportunities. And, society is likely missing out on great innovators and leaders. Thanks for the post.
Thanks, Aleksandar. I agree that a lot of students are missing out due to the high costs of a college education. However, I don’t think this change necessarily addresses that problem. What it does is open up the options for people who already have a substantial amount invested, which is also a good thing.
I understand that the change doesn’t address that problem, but I was just noting that it was still a problem. I like that the IRS is doing something positive. But, I would like to see government do a little more on the educational side of things. This is one step in the right direction. I guess this wasn’t the place to discuss that lol. I said it anyways. Forgive me :-).