Ron Estes, state treasurer, announced positive changes to national 529 college savings plans including the Kansas 529 Education Savings Program thanks to the passage of H.R. 529.
“As the landscape of higher education continues to change, it is important for college savings programs to have the opportunity to evolve and keep pace with these trends,” Estes. “The passage of the H.R. 529 legislation is a positive step in achieving this goal and introduces favorable changes for both plan holders and administrators of 529 plans.”
The Savings Enhancement for Education in College Act, originally introduced by U.S. Representatives Lynn Jenkins (R-KS) and Ron Kind (D-WI), includes three improvements to 529 plans:
Computers are now a qualified expense. H.R. 529 makes computers, related equipment and services (like Internet access) qualified expenses. Under prior law, computers were only eligible if a school required students to have one. However, with online college courses, e-textbooks, and virtual classwork becoming the norm, computers have become essential for many students to fully participate in their college experience.
Distribution aggregation requirements have been removed. H.R. 529 eliminated an outdated and unnecessary accounting rule that added costly paperwork requirements for 529 plan administrators, which only affected account owners using multiple investment options for the same beneficiary.
Redeposit funds are now tax-free. Previously, refunds were treated like a nonqualified withdraw subject to taxes and penalties on the earnings portion of withdraw from a 529 account. H.R. 529 now allows families to recontribute the refund to their 529 account within 60 days and avoid those taxes and penalties. Refunds occur from a variety of reasons including scholarships, financial aid, or withdrawing from courses due to an illness. Regardless of the reason, this ensures refunds are not subject to penalty if re-deposited back into a 529 account in a timely manner.
“Making computers a qualified expense, simplifying the paperwork requirements, and allowing refunds to be redeposited are common sense, inexpensive measures that will help families save for higher education costs,” explained Estes.
The Kansas 529 Education Savings Program, administered by the Kansas State Treasurer’s Office, was created to help families save for higher-education at any accredited college or university in the country (along with some foreign institutions). This includes traditional four-year universities, community colleges and technical programs.
The Kansas program includes three plans: Learning Quest, available directly from American Century Investments; Learning Quest Advisor, sold through financial advisors; and the Schwab 529 College Savings Plan, available through Charles Schwab & Co., Inc. and managed by American Century Investment Management, Inc.
Collectively, all three Kansas plans assist the families of more than 190,000 students save for higher education.
Additional information about Learning Quest is available by calling 1-877-345-8837 ext. 2181 or by visiting www.LearningQuest.com. For information about the Schwab 529 College Savings Plan, please call Schwab at 1-888-903-3863 or go to www.Schwab.com/529.