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house Bill H.R. 529

Letting Students Use Untaxed Savings (529 Plans) To Buy Computers For College

Argument in favor

Allowing college students to use 529 funds to buy computers is an obvious reform that makes sense, as is eliminating redundant paperwork requirements.

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05/19/2015
"In this economy, college is the new high school. We need to make it affordable for all Americans so that we can compete on the world stage."
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bart's Opinion
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02/23/2015
With the financial burden on college students increasing, this is a small gesture that could help.
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02/27/2015
Technology is driving the classroom and the workplace in the 21st Century. By allotting students money for college but not money to ACHIEVE in college is counterproductive
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Argument opposed

Taxing distributions and refunds from 529 plans could bring in revenue to fund other education-related programs.

John's Opinion
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02/14/2016
Looks like a gimmick to help the computer corporations increase their falling numbers. Want to help these students help put their parents to work so buying a computer won't be such a burden. End NAFTA, IFTA and Don't even think about TPP
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John's Opinion
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06/21/2015
The fund is specifically for the cost of the education. A computer is not specific enough to warrant inclusion.
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Mark's Opinion
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06/29/2016
Colleges/universities have computer labs. My college they were open 24/7. They have more than enough acces to computers. Their own computer is a luxury item, in other words not necessary.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
      senate Committees
      Committee on Finance
  • The house Passed February 25th, 2015
    Roll Call Vote 401 Yea / 20 Nay
      house Committees
      Committee on Ways and Means
    IntroducedJanuary 26th, 2015

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What is House Bill H.R. 529?

This bill would amend the Internal Revenue Code to clarify that college students can use money from 529 college savings accounts to buy computers — if  that computer would be primarily used in school.


Introduced in 1996 to incentivize tax payers to save money for their young relatives, 529 plans are college savings accounts that are exempt from federal taxes. These funds could only be applied to eligible institutions of higher education.  

Under this legislation, distribution aggregation requirements for 529 plans would be eliminated. Previous changes in the tax treatment of 529 plans made their distributions tax-free, which makes aggregating the distributions unnecessary.

Refunds from colleges to a student’s 529 account would be permitted if they occur within 60 days of the student withdrawing from college. This would be a change from the current law, which subjects refunds to the income tax on earnings and a 10% penalty. This would only apply to distribution taken after December 31, 2014.

Impact

College students with 529 plans and their families, college administrators, 529 plan administrators, computer manufacturers, and the IRS.

Cost of House Bill H.R. 529

A CBO cost estimate is unavailable.

More Information

In-Depth:

529 plans and those who utilize them to save for college found themselves in the political spotlight after President Obama’s 2015 State of the Union Address. In his speech he detailed a plan to tax 529 funds upon their withdrawal like regular income. This would have ended the tax-free treatment of the college savings, which he and his administration viewed as disproportionately benefiting rich families. That tax revenue would then be used to expand an education tax credit targeted towards low- and middle-income families.


The proposed tax increase on 529 plans was met with hostility from both sides of the aisle, with House Speaker John Boehner (R-OH) and Rep. Chris Van Hollen (D-MD) voicing their opposition to the proposal. The Obama administration ultimately dropped the proposed tax increase.


Of Note:

As of September 2014, there were $240.7 billion deposited in 529 college savings plans. There are about seven million families with 529 college savings accounts, and there are a total of nearly 12 million 529 accounts.


Media:

Sponsoring Rep. Lynn Jenkins (R-KS) Press Release

CBS News

Forbes

U.S. News & World Report

SavingForCollege.com

Wall Street Journal (Context)

Fox News (Context)

Forbes (Context)

(Photo Credit: Flickr user PennStateNews)

Official Title

To amend the Internal Revenue Code of 1986 to improve 529 plans.

    "In this economy, college is the new high school. We need to make it affordable for all Americans so that we can compete on the world stage."
    Like (103)
    Follow
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    With the financial burden on college students increasing, this is a small gesture that could help.
    Like (27)
    Follow
    Share
    Technology is driving the classroom and the workplace in the 21st Century. By allotting students money for college but not money to ACHIEVE in college is counterproductive
    Like (16)
    Follow
    Share
    College savings accounts should be able to help students with all of their education related expenses.
    Like (11)
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    College students are broke, trying to better themselves, trying to better our workforce, and trying to better our future. Help them as much as possible. O_O
    Like (10)
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    Let's help ease the financial burden on students.
    Like (3)
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    Looks like a gimmick to help the computer corporations increase their falling numbers. Want to help these students help put their parents to work so buying a computer won't be such a burden. End NAFTA, IFTA and Don't even think about TPP
    Like (2)
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    I know that I'm old school and that I don't trust the government. My son would probably think this a good idea since he has soon to be three girls. However this is still state government controlled of the individual savings. It sounds like the sale job that was presented to the American ppl on building your retirement fund with social security. However, students should not have to suffer because government has monopolized and hijacked the cost of education.
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    A computer is no different than a textbook. An expected tool for learning.
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    Computers are becoming an essential part of higher education, some jobs will require use of a program, and to educate students on using computers to their own benefit will only help them in their studies.
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    Get out of the taxpayers hands and into the hands of the students themselves. This teaches character building, discipline, and self-sufficiency.
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    College is expensive. Computer are necessary in today's education. Therefore, computer are not a want, but a need for students to succeed in modern day.
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    Computers are as important as textbooks for college students. 529 savings should be eligible to cover all student needs.
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    Computers are essential for college students
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    Colleges/universities have computer labs. My college they were open 24/7. They have more than enough acces to computers. Their own computer is a luxury item, in other words not necessary.
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    college is expensive, with dorms, tuition, etc. our future workers can not start off their life With a giant debt to pay off.
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    The fund is specifically for the cost of the education. A computer is not specific enough to warrant inclusion.
    Like (1)
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    I think that there are other ways to use that money besides putting it back to institutions themselves
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    The computer is the pencil and paper of our time and so much more.
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    Kids need computers to learn. If this makes it a little easier I'm all for it.
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