Family Finance: Popularity of 529s May Secure Plans' Tax-Free Status
Money is flowing into 529 college-savings plans, fueling expectations that Congress could act this year to make their tax advantages permanent.</br></br>At the end of 2004, assets in 529 plans reached an estimated $52.3 billion, according to the nonprofit College Savings Foundation. That marks a nearly 50% increase from 2003. Stock-market gains played a role, but much of the growth came from increasing numbers of parents establishing accounts for their kids.</br></br>Right now, the tax-free status 529 plans enjoy is set to expire Dec. 31, 2010. After that, the dollars parents withdraw for college would be taxed in some fashion. Lawmakers have talked about permanency several times in recent years, but nothing of substance has come of that.</br></br>College-funding experts see the growth in assets and the Bush administration's effort to make some recent tax cuts permanent as a sign that 529 plans are here to stay.</br></br>"We're starting the discussions with the key decision makers in Washington to stress the importance of [removing] the sunset provision," says Chuck Toth, a board member for the College Savings Foundation.