Tuition Plan Consortium Helps College Savers Make Sense of New Tax Legislation
ST. LOUIS, Feb. 1, 2011 /PRNewswire/ -- To help college savers understand how they will be impacted by new tax legislation in 2011, Tuition Plan Consortium, a national group of private colleges and universities that sponsors the Private College 529 Plan(SM), has outlined the following important changes to the Economic Growth Tax Relief Recognition Act (EGTRRA):
- Coverdell Education Savings Account Extension– This savings plan, sometimes known as the IRA for education, can be used for higher education as well as elementary and secondary education. Benefits set to expire at the end of 2010 are now extended through 2012. These benefits include a $2,000 annual contribution limit, the ability to include elementary and secondary school education as qualified expenses, and the option to take tax-free distributions from the account and claim an education tax credit in the same year.
- Limiting "Qualified Technology Expenses" for 529 Plans – Before the 2011 changes, computers, other similar technologies and internet access were considered qualified expenses for 529 plans. The new rules no longer allow those expenses to be funded by a 529 account without penalty. However, if a college requires students to have a computer in order to attend, technology will be included as a qualified expense. It pays to double check.
- Estate-tax Exclusion Now Reinstated – For 2011 and 2012, the estate-tax exclusion will increase to $5 million or $10 million for a couple, giving wealthier parents and grandparents additional motivation to help boost college savings accounts since contributions can now reach up to the $65,000 allotted annual gift-tax exclusion amount.
"Understanding how tax reform and other Congressional mandates impact college savings strategies can be overwhelming for Americans families," said Nancy Farmer, president of Tuition Plan Consortium. "College savers are encouraged to speak with a professional about how tax legislation impacts them directly. With tax season just around the corner, now is also a great time to speak with an accountant about the potential to use anticipated tax refunds to boost funds in college savings accounts."
"With parents and grandparents investing a record level of assets in 529 college savings plans, we know that families want and deserve the latest information on how and when those assets can be used," said William Raynor, Vice Chair of the College Savings Foundation, a leading nonprofit helping American families save for their children's college education.
About Private College 529 Plan and the Tuition Plan Consortium
Owned and operated by a national consortium of more than 270 leading private colleges and universities, Private College 529 Plan was created by authorization of the U.S. Congress for colleges and their consortia to help families save for college and increase the affordability and accessibility of higher education. Private College 529 Plan enables families to invest in their children's future by prepaying tuition at member institutions, protecting their savings from annual tuition inflation.
The educational mix of private institutions participating in Private College 529 Plan provides families with a wide range of college choices. As opposed to other state specific congressionally authorized plans, Private College 529 Plan has a national scope, with participating private colleges across the United States. It also differs in that its administrative management is by the institutions themselves as opposed to government. Today, Private College 529 Plan is working for nearly 6,000 families with over $160 million under management. For more information, visit https://www.privatecollege529.com/.
SOURCE Tuition Plan Consortium
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