News & Press Releases
Important News: Federal legislation includes changes to Section 529 college savings plans
The federal tax reform bill, which was signed into law on December 22, 2017, includes provisions related to Section 529 college savings plans. Specifically, language in the bill allows distributions used for up to $10,000 of tuition expenses at a public, private or religious elementary, middle, or high school per student per year from all Section 529 college savings plans and rollovers out of 529 college savings plans into Section 529A ABLE accounts to occur free of federal tax.
Note for California taxpayers: The California Franchise Tax Board (FTB), in its role as the State's tax authority, has determined that current California State tax law does not conform to the new federal tax treatment. This means that, for California taxpayers, the earnings portion of any distribution from any 529 plan to pay for tuition expenses at a public, private or religious elementary, middle, or high school or any amount rolled-over from a qualified tuition program to an ABLE account will be subject to California income tax and an additional 2.5% California tax.*
*State tax treatment of withdrawals for K-12 (kindergarten through 12th grade) tuition expenses is determined by each state in which you have taxable income. Please consult a qualified tax advisor for further guidance for your particular situation.