Sending a child off to college can be a tough situation, emotionally and mentally, for many different reasons. Creating a 529 plan to save money and pay for your child’s college tuition is very important, but what about all the other costs? There are hidden expenditures that arise when each kid goes to college which creates more of a need to withdraw money from the 529 plan in order to cover those costs that are more than just tuition. On February 26, The House passed a new bill that enhanced 529 college tuition plans.
The bill improves 529 plans by:
- Allowing payments from qualified tuition programs for the purchase of computer or peripheral equipment, computer software, or internet access and related services to be used primarily by the beneficiary while enrolled in an eligible educational institution.
- Eliminating the requirement that distributions from a plan be aggregated for purposes of determining the amount includible in a taxpayer’s income (i.e., where a beneficiary has received multiple distributions from a plan in the tax year, the portion of a distribution that represents earnings would be determined on a distribution-by-distribution basis, rather than an aggregate basis);
- Allowing a tax-free recontribution to a plan of amounts refunded to a student by an eligible education institution if the recontribution is made no later than 60 days after the date of such refund and doesn’t exceed the refunded amount.
By Daniel Blackwell