October 9, 2014
Enhanced 529 SAVE Act
Senate Minority Leader Mitch McConnell (R) of Kentucky introduced Senate Bill 2882 (S.2882) known as the Enhanced 529 Setting Aside for a Valuable Education Act (“SAVE Act”) on September 18, 2014. The Enhanced 529-SAVE Act is designed to make 529 college savings plans more accessible to lower and middle-income families.
If adopted, the SAVE Act would encourage employer contributions to 529 plans by excluding up to $600 of an employer’s contribution from an employee’s gross income. The SAVE Act would also provide a tax incentive for lower-income families and individuals to save money for college by allowing the individual contributing to a 529 plan to qualify for the Saver’s Credit. The Saver’s Credit is an income-based, non-refundable tax credit of up to $4,000.
Money saved for college by parents and grandparents in 529 college savings plans has the potential to reduce or eliminate their loved ones’ future student loan burden. Giving families tools to help them save for their children’s and grandchildren’s education is an investment in the nation’s future. I hope Congress will pass the SAVE Act into law during the lame duck session of Congress that begins in December. We will continue to monitor the SAVE Act’s progress in this space.