Congressman Joe Pitts (PA-16) today reintroduced the Help Kids Save for College Act. The bill would enhance popular 529 college savings plans by allowing employers to make tax free matching contributions to an employee's 529 account, up to $1000 a year. Named after their section in the tax code, 529 accounts allow individuals to save for higher education costs by earning tax-free interest.
Congressman Pitts' statement follows:
"Families are concerned about their financial security, including the rising cost of higher education. This bill will provide employers with the incentive to help families save more for college. Employers will like this bill because it will allow them an opportunity to offer another tax-free benefit to their employees. It's a simple piece of legislation that could have a big impact on American families."
A 529 plan is a tax-advantaged savings plan designed to encourage savings for future college costs. 529 plans are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code. In 2008, Americans had $88.5 billion invested in 529 accounts. The Help Kids Save for College Act was also introduced by Rep. Pitts in the last Congress (109th Congress) as H.R. 5591. The only change from the prior bill is the amount employers would be allowed to match as tax-free contributions to the funds--$1,000, up from $500 in the previous bill.
Rep. Pitts has also cosponsored legislation introduced by Rep. Earl Pomeroy (D-ND) that would provide a tax credit for low-income families to encourage their use of 529 accounts. The bill, H.R. 1351, would extend a popular tax credit currently limited to retirement savings in order to provide a tax credit of up to $1,000 for an individual filer and $2,000 for those filing jointly for low income families to encourage contributions to college savings accounts.