Federal Tax Benefits of 529 College Savings Plans

Tens of thousands of Oregon families will benefit.

Students from OSU relaxing on a summer day Photo by: Bonnie King

(SALEM) - State Treasurer Randall Edwards, administrator of the Oregon College Savings Plan, announced good news from Washington, D.C., for Oregon families saving for college. Congress voted overwhelmingly last night to retain the federal tax advantages of the 529 college savings plans, which were set to expire after 2010.

“This is a great day for Oregon families struggling to send their kids to college,” said State Treasurer Randall Edwards. “Tax-free investing will help families save more money for their children’s future. I’d like to personally thank the Oregon delegation for its support on this bill.”

Under the 529 college savings plans, investments grow free of federal tax and can be withdrawn tax-free provided the funds are used for educational expenses.

When the plans were first created, a clause in the bill effectively would have ended its federal tax-free status at the end of 2010. Oregon 529 plans also grow free of state tax.

“By eliminating the sunset clause on the tax-saving provision in the 529 plans, investors in these plans can forge ahead with a broader sense of security that didn’t exist before the passage of this bill,” Edwards said. “This also removes a barrier for families who were sitting on the sidelines, waiting to see if Congress would retain the tax advantages.”

As a state legislator in 1999, Treasurer Edwards was instrumental in passage of the legislation to create the Oregon College Savings Plan, and as State Treasurer kicked off the Plan in January 2001, helping families put away more than $650 million in 90,000 accounts to date toward their children’s higher education.

He has also been a constant advocate in repealing the sunset clause in his role in the National Association of State Treasurers and in the College Savings Plan Network. The organizations helped introduce a stand-alone bill for 529 tax permanency more than a year ago, which gained broad bipartisan support in both the House and the Senate. The 529 provision was ultimately included in the Pension Protection Act.

For more information on the Oregon College Savings Plan, go www.oregon529network.com or call 503.373.1903.

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