The 529 and ABLE Account Improvement Act of 2017

January 17, 2017


Washington, DC, January 17 – The College Savings Foundation (CSF) applauds U.S. Representatives Lynn Jenkins (R-KS) and Ron Kind (D-WI) for their introduction of H.R. 529, known as the 529 and ABLE Account Improvement Act of 2017. H.R. 529 encourages saving by eliminating perceived barriers and providing flexibility for American families planning and saving for higher education.

“H.R. 529 will make important improvements to 529 college savings plans to encourage more American families to save for higher education,” said Richard Polimeni, Chair of CSF, a not-for-profit organization whose mission is to help families achieve their education savings goals.  “Not only does college saving help students reduce their dependence on student debt, but it also prepares them to be more successful in a competitive workforce.”

Representative Lynn Jenkins has been a longtime and passionate champion of 529 plans and the families they help, going back to her years as Kansas State Treasurer with responsibility for college savings.  Representative Kind also is a longtime advocate for families and encouraging saving for the future.  CSF has worked closely with Representatives Jenkins and Kind throughout the years to ensure college savings proposals provide workable solutions for families facing the high costs of college.  H.R. 529 builds upon a series of proposals introduced by Representatives Jenkins and Kind that have been enacted into law.

A more recent addition to the legislation is a focus on disability savings programs. “H.R. 529 also will enhance the programs now being developed by states to implement the Stephen Beck, Jr. Achieving a Better Life Experience (ABLE) Act, one of the most significant pieces of disability legislation since the Americans with Disabilities Act, to assist individuals with disabilities and their families to save for qualified disability expenses,” noted Polimeni.

The key elements of the legislation are:

  • Excludes from income and payroll taxation, employer “seed money” contributions made to a 529 or ABLE account for which the designated beneficiary is the employee or a member of the employee’s family.  To assist small employers in setting up a payroll deduction program for 529 and ABLE contributions, the current credit available for small employer retirement plan start-up costs would be extended to costs related to establishing a 529 and/or ABLE payroll deduction contribution program.  Those changes would encourage more employers to offer direct payroll deduction into 529 and ABLE programs.
  • Removes real and perceived barriers to saving through a 529 plan by eliminating the penalty tax for: (1) using 529 funds to pay down student loans and (2) making charitable contributions.
  • Clarifies that 529 and ABLE account owners can rebalance their investments more often without violating current investment direction limitations, ensuring that families will be able to adjust their portfolios as needed.
  • Allows rollovers of funds between 529 accounts and ABLE accounts without incurring income or penalty tax liabilities.

“There is no greater investment this country can make than providing incentives and assistance in planning and saving for major goals including life-long education and increased self-sufficiency for persons with disabilities,” Polimeni said.

The College Savings Foundation (CSF) is a Washington, D.C.- based not-for-profit organization helping American families achieve their education savings goals.

Contact:  Lynthia Romney, 914-238-2145/914-589-2140