529 account

Dresher, PA—Ascensus—whose technology and expertise helps millions of people save for retirement, education, and healthcare—announced that more than $3 billion has now been gifted to 529 and ABLE savings accounts through the company’s Ugift^® program.

Senator Ted Cruz (R-TX) has reintroduced the Student Empowerment Act. The bill would allow public, private, and religious school students to use 529 savings accounts to cover K-12 expenses—including expenses related to tutoring, testing fees, and educational therapies for students with disabilities.

Retirement legislation has been a welcome area of bipartisan cooperation in the U.S. Congress, marked by a history of Republican and Democratic bill co-sponsorship and support. A recent example is the Setting Every Community Up for Retirement Enhancement Act—the SECURE Act—passed and signed into law in 2019. The SECURE Act has been hailed as the most important retirement enhancement legislation in more than a decade.

The House of Representatives has passed the Consolidated Appropriations Act of 2023, HR 2617, today with a 225-201-1 vote. Included in this bill is the SECURE 2.0 Act of 2022. Following the Senate’s approval on December 22, 2022, the bill will now be presented to the President for his signature.

The Senate has approved the Consolidated Appropriations Act, 2023 (CAA 2023), by a 68-29 vote. Included in this bill is the SECURE 2.0 Act of 2022.

Senate Appropriations Committee Chairman Patrick Leahy (D-VT) has released HR  2617, the Consolidated Appropriations Act of 2023, a $1.7 trillion fiscal year 2023 omnibus appropriations bill, whose provisions will fund government operations for the fiscal year. Included in this legislation, as has been anticipated by many, is the SECURE 2.0 Act of 2022.

The Securing a Strong Retirement Act of 2022 was passed by the House of Representatives earlier this year. The Senate HELP committee approved the RISE & SHINE Act and the Senate Finance committee likewise approved the EARN Act. The House and Senate worked together to combine these bills into the SECURE 2.0 Act that has now been included in the Consolidated Appropriations Act.

Inclusion in the Consolidated Appropriations Act was considered the last opportunity for passage of this retirement legislation in the current Congress. The Consolidated Appropriations Act must now be approved by the House and Senate and signed by the President, for it—and the SECURE 2.0 Act—to become law.

Among the 90 provisions in the SECURE 2.0 Act, some of the significant items include the following.

• Allowing workers to participate in employer plans after 2 consecutive 12-month periods of 500 hours of service, beginning in 2025
• Increasing the catch-up contribution limit for select age groups
• Requiring catch-up contributions to be made on a Roth basis for those earning more than $145,000, except for SIMPLE plans
• Permitting employer contributions to be made on a pre-tax or Roth basis
• Increasing the RMD age to 73 in 2023, and age 75 in 2033
• Expanding automatic enrollment in retirement plans
• Creating a Retirement Savings Lost and Found
• Creating new emergency savings accounts linked to individual account plans
• Allowing student loan payments to be treated as elective deferrals for purposes of matching contributions
• Modifying the existing saver’s credit to provide for a matching contribution to the individual’s retirement savings vehicle
• Creating a “starter 401(k) plan” with reduced contribution limits and nondiscrimination safe harbors
• Increasing the small employer startup credit to 100% for certain employers
• Increasing the age of disability onset for qualified ABLE programs to age 46
• Allowing certain rollovers to Roth IRAs from 529 college savings accounts

Additional details on the SECURE 2.0 Act will continue to be provided. Visit ascensus.com for the latest information.

Congressman Lloyd Smucker (R-PA) has introduced H.R. 8128, a bill to expand the allowable education expenses available for use from 529 education savings accounts. The bill would allow industry recognized apprenticeship programs registered and certified by an eligible Standards Recognition Entity as qualified education expenses. These programs would be in addition to existing apprenticeship programs registered and certified with the Secretary of Labor that qualify as higher education expenses.

The definition of qualified education expense would also be further expanded to include expenses related to a “career and technical education program” (as defined by the Carl D. Perkins Career and Technical Education Act of 2006) or a “career pathway” (as defined by the Workforce Innovation and Opportunity Act).

Senators Richard Burr (R-NC) and Bob Casey (D-PA) have introduced the College Savings Recovery Act, to allow families to transfer unused funds in their college savings 529 accounts into a Roth IRA. The College Savings Recovery Act was originally included as part of Senator Burr’s Boost Savings for College Act proposed in 2017.

Senator John Kennedy (R-LA) has introduced S. 4265, the Inflation-Adjusted Education Investment Act. The proposal would increase the current limit on 529 plan distributions from $10,000 to $12,000. The bill would also make the new cap adjustable for inflation beginning in 2023.

May 3, 2022 - Senators Maggie Hassan (D-NH) and Susan Collins (R-ME) have introduced S. 4103, the Helping Parents Save for College Act. The bill would provide low- and middle-income parents with a tax credit for contributions to 529 education savings accounts by expanding the Saver’s Credit. The credit would be worth up to 50 percent of 529 account contributions, with a maximum credit of $2,000 for low-and-middle income families.

Additionally, the proposal would allow plan beneficiaries to move excess funds from the 529 account to a Roth IRA without penalty, so long as the account was maintained for a 10-year period at the time of the distribution. This would alleviate concerns of adverse tax consequences if funds are not used for college. The amount eligible for rollover to a Roth IRA is limited to the lesser of the annual Roth contribution limit or the aggregate amount contributed to the program before the five-year period ending on the date of the distribution.