Three Senators joined forced on Sept. 12 to introduce the Boost Saving for College Act, legislation that Sen. Richard Burr, R-N.C., says is a “common-sense bill that will give families more options for preparing their children for college without going into endless debt.”
The bill, S. 1790, introduced by Burr as well as Sen. Bob Casey, D-Pa., and Lisa Murkowski, R-Ark.:
- Provides a tax credit to low- and middle-income families who might not ordinarily save for college;
- incentivizes employers to match employee contributions to their college savings;
- allows unused savings to be rolled over into a Roth IRA; and
- enables families with a disabled child to roll over unused funds from their 529 account into an ABLE account.
“College savings accounts are a great way to safely put away money to ensure a better future for your child,” Burr said in a statement. “I have long advocated for making college more affordable through several bills, such as the legislation to reduce interest rates for student borrowers” that he authored with Sen. Angus King, I-Maine.
This bipartisan legislation has been endorsed by 14 higher education associations, including the American Council on Education and the North Carolina State Education Assistance Authority (SEAA).
The senators state that today, a degree from a two-year institution typically costs more than $19,000, and one from a four-year institution typically costs nearly $100,000.
The Boost Act would allow employers to offer a match of up to $1,000 a year to 529 plan contributions, the senators explained in their joint statement. The employer match would be excluded from the employee’s gross income, which means the worker won’t be taxed when their employer makes a contribution to a 529 account owned by the employee or spouse. The beneficiary of the 529 account may be the employee, their spouse or their dependent.
The act would also allow families to roll over unused college funds or scholarships into a Roth IRA, with the caveat being that the 529 account must have been open for at least 10 years. The 529 could be rolled over into the Roth IRA of the 529 account owner or their beneficiary.
Families with a disabled child that have funds “trapped in a 529” would be allowed to roll the account to a 529A, or ABLE, account to cover disability-related expenses. Families would be taxed on withdrawals otherwise.
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