H.R. 529 (115th Congress) would improve 529 plans

H.R. 529 was introduced in Congress by Reps. Lynn Jenkins (R-KS) and Ron Kind (D-WI). These are the same representatives that introduced H.R. 529 of the 114th Congress, which was eventually rolled into and passed via the Protecting Americans from Tax Hikes Act in 2015. H.R. 529 offers the following improvements to 529 plans:

  1. Provide businesses with tax incentives to offer 529 plans, including ABLE accounts, to their employees by creating, "Qualified Payroll Deduction Contribution Programs," allowing:

    1. Employees to exclude up to $100 in contributions to the accounts annually, adjusted annually after 2017 for cost-of-living

    2. Expansion of the tax deduction to small employers for setting up retirement plans to include payroll deduction programs to fund 529 plans, up to $1,000

  2. Remove the twice-per-year annual reallocation restriction on 529 accounts, including ABLE accounts

  3. Would allow rollovers between 529 and ABLE accounts for the same beneficiary

  4. Allow withdrawals used to pay qualified student loans (within 90-days of withdrawal) to be excluded from the additional penalty tax

  5. Allow withdrawals to be donated to charity (subject to restrictions) to be excluded from the additional penalty tax

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