529 plans

In the 2011 California legislative session, the California Asset Building Program is advancing the following state policy initiatives (See printer-friendly downloadable agenda at right under Related Files):

This measure creates an easy way for Californians to save for college by amending the state income tax form to allow filers to directly deposit their refund into a state-administered tax-advantaged 529 college savings account. Providing an easy, structured savings opportunity at tax time is designed to help families save for postsecondary education. This bill requires the Franchise Tax Board to revise the state income tax form to allow a filer to deposit his or her tax return into a ScholarShare College Savings Account.

A sample letter of support is attached at right.

This guest post from Jason Delisle, Director of the Federal Education Budget Project at the New America Foundation originally appeared on the Higher Ed Watch blog on October 22, 2010.

Tax credits and incentives have proliferated over the past several decades to help families build wealth or access higher education, but rarely at the same time. The 1990s saw the creation of the Hope and Lifetime Learning Credits to help struggling families meet the rising cost of post-secondary education, but due to complexity and access issues, they have not achieved the desired effect.

The Obama Administration and Congress improved the Hope Credit in the form of the American Opportunity Tax Credit (AOTC) last year, but much more can be done to help low-income students afford college. Likewise for the Saver's Credit. Designed as a tool to help low- and middle-income families save for retirement, the Saver's Credit has been overly complex and underutilized, and neglects other long-term savings needs to help low-income families move up the income ladder.

Today, I published a paper detailing suggestions on improving these credits in particular -- by delivering the AOTC earlier into 529 college savings plans and by better targeting of the Saver's Credit and allowing college savings vehicles like 529s to be eligible products for the credit.

You can read the paper here.

This presentation was given at CFED's 2010 Assets Learning Conference. To view the presentation, please see the Related Files to the right of this page, or click here.

This presentation was given at the September 13th, 2010 summit of the Baltimore CASH Campaign, the Maryland CASH Campaign, and the Job Opportunities Task Force. View the presentation by clicking to the right, or here.

This presentation was given at the 2010 CSPN conference. Please click "related files" to the right or, you can view this presentation here.

This was presented at the 2010 NASFAA National Conference in Denver, Colorado. Please click on "Related Files" to the right of this page to view the presentation, or see the presentation here.

Tax Incentives for College Savings

Include 529 plans as an Eligible Product for the Saver’s Credit, and Make the Credit Refundable

Currently, taxpayers aged 18 years or older who are not dependents or full-time students may receive a nonrefundable Saver’s Credit equal to between 10 and 50 percent of their compensation up to $2,000 contributed to an employer-sponsored qualified retirement plan or IRA.