Rep. Steil Proposal Expands 529 Accounts for Home Learning Expenses
WILL joins coalition to advocate for use of 529s for learning-at-home expenses
The News: Last week, WILL joined 40 state and national groups led by Americans for Tax Reform (ATR) in urging Majority Leader McConnell and Minority Leader McCarthy to consider Congressman Bryan Steil’s proposal to expand 529 savings accounts to permit families to use the accounts for expenses incurred from learning-at-home during the COVID shutdown.
529 plans allow families to invest money tax-free into an account for educational expenses. The plans have gradually been expanded over time, including the Tax Cut and Jobs Act, to include expenses for K-12 private education. If a family withdraws funds for an expense not permitted by law, they accrue a 10% tax penalty.
The letter to Leader McConnell and Leader McCarthy can be read here. Summary in Politico is here. The Congressman’s proposal is supported by several of his colleagues in a letter submitted to Speaker Pelosi and leadership.
Would This Help Wisconsin? YES. Due to the COVID shut down, over 900,000 students are currently learning at home, resulting in increased costs and hardships by middle class and low-income families. According to results from a forthcoming WILL survey of Wisconsin parents, about 30% have incurred education expenses as a result of recent school closures.
The 529 plans are managed by the state. In Wisconsin, a 529 plan can be used for K-12 expenses such as tuition, fees, books, supplies, and equipment. The Steil proposal would enable Wisconsin to expand the definition. There are over 318,000 529 savings accounts in Wisconsin (Edvest and Tomorrow’s Scholar).
The Quote: Executive Vice President CJ Szafir said, “WILL credits Congressman Steil for his leadership during a time of great crisis. COVID represents an earthquake to the K-12 education system and student learning. Congressman Steil’s common sense proposal could give families immediate relief by allowing them to access their 529 accounts for educational expenses without incurring a tax penalty.”