May 08, 2006

Crapo: Tax-Free Tuition Plan Must Continue

Senator wants to stop sunset of college savings tax advantages

Washington, DC â?? Congress should act now to protect the ability of parents to save and withdraw money tax free for their childrenâ??s college education, Idaho Senator Mike Crapo said today. Crapo, a member of the Senate Finance and Banking Committees, urged action to continue the tax advantages of the 529 College Savings Plan in a letter to the members of a House-Senate pension reform legislation conference committee.â??College savings plans have become critical to families planning and saving for their childrenâ??s future college education,â?? Crapo said. â??Since Congress cut the taxes families pay when participating in these plans, enrollment has steadily increased. Students, parents, educators, and institutions of higher learning are all benefiting by this legislation.â??But the tax advantages of the 529 plans will expire in 2010 unless Congress acts. Crapo says an opportunity to keep the savings plans alive exists by amending a pension reform agreement now in conference committee between the House and the Senate. Senator Blanche Lincoln (D-Arkansas) joined Crapo in bringing the bipartisan request before members of the conference committee.â??We are hopeful the conferees will look favorably on this request because of the strong bipartisan support the 529 program enjoys,â?? Crapo added. â??This is the perfect opportunity to keep these tax breaks from disappearing.â?? A 529 College Savings Plan is a state-sponsored, tax advantaged savings plan that can help families and individuals save for higher education. These plans offer a number of benefits including federal tax-free withdrawals for qualified expenses, tax deferral on earnings, professional money management and the flexibility to use the proceeds at virtually any higher education institution. As part of the 2001 tax relief bill, Congress changed the tax treatment of 529 plans so that withdrawals for higher education expenses are tax-free.# # #