April 7, 2008

Rep. Pitts Introduces Legislation to Help Families Pay for College

H.R. 5591 would let employers help families save for school

Washington– Congressman Joe Pitts (PA-16) announced the introduction of the Help Kids Save for College Act today at Millersville University. Rep. Pitts was joined by Millersville President Dr. Francine McNairy as well as Millersville student Sarah Harper, who spoke in support of the legislation. The bill, H.R. 5591, would enhance popular 529 college savings plans by allowing employers to make tax free matching contributions to an employee’s 529 account, up to $500 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:

“By creating an incentive to save, this legislation provides the opportunity to help families increase their financial security while addressing one of the most pressing issues facing many families today—the rising cost of higher education. 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."

Background

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 2007, Americans had more than $89.5 billion invested in 529-plan assets. H.R. 5591 would allow an employer to match their employees’ savings in 529 plans dollar for dollar, up to $500 per year, and the matching funds would be non-taxable income to the employee.