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Recent Federal News

Twice-yearly investment changes in 529 accounts gets House okay

(December 5, 2014) - The U.S. House of Representatives on December 3 passed the the Achieving a Better Life Experience (ABLE) Act, HR. 647, that would permit states to operate tax-free investment programs for individuals with a disability, similar to 529 education savings plans. ABLE accounts would enable participants to make twice-yearly investment changes. As part of the bill, the twice-yearly change limitation would be added to 529 education savings plans, replacing the current IRS-imposed once-yearly limitation. The ability to make up to two investment changes in a 529 account would begin in 2015.

The bill now goes to the Senate which is likely to pass it and send it to the President for his signature.

Inflation adjustment affecting college savers

(October 31, 2014) - In Revenue Procedure 2014-61 the IRS sets forth several inflation adjustments for 2015. The adjustments affecting college savers include the following:

- The kiddie tax threshold increases from $2,000 unearned income to $2,100 unearned income.

- The income phase-out for the Lifetime Learning Credit increases from $54,000 to $55,000 ( from $108,000 to $110,000 for a joint return).

- The income phase-out range for qualified education savings bonds increases to $115,750 - $145,750 for joint returns and $77,200 - $92,200 for all other returns.

- The lifetime exemption for gift and estate tax purposes increases from $5.34 million to $5.43 million. (The gift-tax annual exclusion remains at $14,000.)

For more information, click here.

Student loan interest rates headed upward

(May 23, 2014) - Federal student loan interest rates will be higher for the 2014-15 school year compared to 2013-14. The rate on new direct subsidized and unsubsidized loans for undergraduate students is increasing from 3.86% to 4.66%.

The rate on direct unsubsidized loans for graduate/professional students is increasing from 5.41% to 6.21%, while the rate on PLUS loans for parents and graduate/professional students is increasing from 6.41% to 7.21%.

Federal student loans are fixed-rate loans.

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