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Regulation and Compliance > Legislation

New Bill Allows 529 Plans to Be Tapped for CFP, CPA Exams

By Melanie Waddell

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A new bill, H.R. 1477, would allow 529 plan funds to be used to cover the costs of maintaining professional credentials — for instance, taking the CFP Board and CPA exams.

The bipartisan bill, the Freedom to Invest in Tomorrow’s Workforce Act, expands “eligible uses of 529 savings plans to include fees and expenses required to obtain or maintain recognized postsecondary credentials, including professional credentials and certifications.”

The Certified Financial Planner Board of Standards said Thursday in a statement that it was  pleased to support the bill, sponsored by Reps. Abigail Spanberger, D-Va., and Rob Wittman, R-Va.

The CFP certification, including the CFP exam, would qualify under this legislation, said Maureen Thompson, vice president of public policy at CFP Board.

CFP Board looks forward “to continuing to work with members of Congress, as we have over the last several years, to build support for the legislation and seek [its] enactment,” Thompson said.

The bill gives accounting professionals “greater financial flexibility as they enter the workforce and seek to further their education,” according to the American Institute of CPAs.

The group pointed out in a letter to lawmakers that the bill “would allow individuals to use 529 funds for expenses, fees and costs related to the Uniform CPA Examination (CPA Exam), which is one of three critical components required for licensure” as a CPA.

AICPA told the lawmakers to ensure, as the legislation advances, “that 529 plan owners and administrators can easily understand and use the expanded benefit. To help achieve this outcome, we encourage increased clarity around the process used to identify a certification as a ‘recognized postsecondary credential,’ as well as clarity on the qualifying expenses, fees and costs under the proposal.”

Jan Lewis, chair of the AICPA Tax Executive Committee, said in statement that “certifications and continuing education are cornerstones of the accounting profession, as tax and accounting laws continue to evolve. This bill allows greater flexibility to accounting professionals to gain and maintain professional certifications, including the CPA certification, and better serve our clients.”

Section 529 savings plans allow students and families to save in an investment account for K-12 and college tuition, room and board and related costs. Earnings and contributions can be withdrawn tax-free to pay for qualified educational expenses. Withdrawals for other reasons  are subject to income taxes and a 10% penalty.

The Setting Every Community Up for Retirement Enhancement (Secure) 2.0 Act allows some unused 529 plan funds to be rolled into a Roth IRA.

Melanie Waddell

@Think_MelanieW

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