The current tax-free status of withdrawals from college savings plans would be made permanent under bipartisan legislation introduced Tuesday in the House.
Currently, the tax-free status of withdrawals expires in 2010. Under the legislation introduced by Reps. Earl Pomeroy, D-N.D., and Melissa Hart, R-Pa., that status would be made permanent under the Tax Code.
Section 529 of the Tax Code covers prepaid tuition plans and savings plans. “The time to make Section 529 tax-exemption permanent is now,” Pomeroy, a former North Dakota insurance commissioner, said. “Families are putting aside savings today and are looking forward 5 or 10 or 15 years to a time when they can use the funds to pay for college. This legislation will assist families in planning long-term savings strategies to help fund their children’s education.”