The House plans to vote soon on one bill that would loosen some rules on 529 college savings plans and another that would allow small businesses to deduct their office equipment.
The House is scheduled to vote next week on H.R. 529, which was introduced by Reps. Lynn Jenkins, R-Kansas, and Ron Kind, D-Wis., and would “improve” 529 plans in three areas:
including computers, Internet, and computer equipment used primarily by the beneficiary as qualified higher education expenses;
eliminating all distribution aggregation requirements, even when multiple accounts exist in a 529 plan with the same owner and beneficiary; and
allow account owners to redeposit contributions to a 529 plan within 60 days after the school issues a refund of qualified expenses due to the beneficiary’s withdrawal from school.
The Financial Services Institute applauded the two bills Thursday, stating that the 529 plan bill offers three “common-sense changes” to the accounts. Since being created by Congress in 1996, more than 10 million 529 college savings accounts have been opened, with savings in such plans reaching more than $225 billion.
By allowing computers to be qualified educational expenses, families could “use their savings to purchase an essential tool for today’s college student, thus reducing the burden being placed on a family’s pocketbook as a child begins his/her college experience.”
The bill also removes distribution aggregation requirements to modernize the treatment of 529 accounts, “thus simplifying the 529 process and reducing paperwork burdens,” FSI said.
The bill also permits the redeposit of refunds from colleges without taxes or penalties, and removes the current financial penalty that students and families are faced with when a student is forced to unexpectedly drop out of school, be it for medical, personal, family or other reasons, FSI explains.
Meanwhile, H.R. 636 would permanently amend Section 179 of the Internal Revenue Code to allow small businesses to deduct up to $500,000 in office equipment. Under the bill, small businesses, such as independent financial advisors, can “make investments on new office equipment to help grow their businesses,” FSI said. Small businesses “are strongly in need of these improvements, and without the security provided by H.R. 636, they might choose to not improve their office equipment because they fear that the tax rules that have been in place since the 1950s will no longer apply.”
Uncertainty caused by the currently-expired tax rules for small business write-offs “will keep many small businesses from further growing our nation’s economy, thus necessitating the changes contained in H.R. 636,” FSI said.