Posted on 01/23/2015 6:44:06 AM PST by wbill
LOS ANGELES, Jan 22 (Reuters) - President Barack Obama's proposal this week to roll back tax benefits for so-called 529 plans exposes a fundamental disagreement about who is benefiting from these state-sponsored college savings plans.
529 plans are sponsored by states and run by investment management companies. Withdrawals from the accounts can be used tax-free to pay for qualified education expenses at any college or university in the country, such as tuition, fees and books.
Supporters of Obama's proposal point to a 2012 government report showing the plans being used by less than 3 percent of all U.S. families and that these families tended to be much wealthier than those without 529 accounts.
The Government Accountability Office report also estimated that 47 percent of those with 529 plans had incomes over $150,000, while their median assets of $413,000 were 25 times higher than the median of $15,400 in assets for families without the plans.
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(Excerpt) Read more at finance.yahoo.com ...
However, in reading the article, I could almost believe that I'm one of those evil rich bigoted white people, laughing maniacally while propping my feet up on the backs of the poor, oppressed, and trodden-down. :-)
Lesson learned: You can start investing in a tax free plan that takes up to 20 years to be realized, and find out ten years in it wont be tax free anymore.
529 plans are actually tax breaks for middle class families.
Rich people don’t due 529, or rather don’t need to.
YEP...amazing how the commies move the goal posts...from helping the low-income/middle class to “estimating” that recipients earn $150k or more! What a joke!
If you did a poll over this...actual participants...I think ninety percent would be in the $40k to $100k range. You will find few if any people making less than $30k a year who participate in this. And I doubt that you find anyone who makes over a million a year who participates.
I worked with a guy who was military and his wife GS....put up 529 for both kids....had fair sum of money as kid #1 got to eighteen...and the kid joined the Air Force. Four years later, kid #2 graduated from HS and got a scholarship.....so she didn’t need it either.
If you did a poll over this...actual participants...I think ninety percent would be in the $40k to $100k range. You will find few if any people making less than $30k a year who participate in this. And I doubt that you find anyone who makes over a million a year who participates.
I worked with a guy who was military and his wife GS....put up 529 for both kids....had fair sum of money as kid #1 got to eighteen...and the kid joined the Air Force. Four years later, kid #2 graduated from HS and got a scholarship.....so she didn’t need it either.
We will see.
People talk all the time about diversifying their portfolios across domestic and international stock, bonds, different cap sizes, etc etc. They don't often mention diversifying across tax strategies.
I'd bet there are a lot of people thinking about that, right now, though. Me included.
I'm sorry for any of you who are still relying on Congress' promises about these accounts. You are screwed.
I’m betting that someone in the ‘rat party, particularly in the Obama admin, did a demographic study of who has 529’s and came to the conclusion that repealing this tax break is another way to “get YT”.
Someone just try to refute that assertion!
A few 10's of billions in 529 accounts is peanuts, in comparison to all those fat retirement accounts that are sitting out there.
Just wait until they decide Roth’s need to be taxed when withdrawn.
If you think you can trust the US Government, ask an Indian.
Maybe. People are pretty benign, these days.
for the record....... existing 529 plans are not affected inspite og interviews of hand wringing by current students usin the 529 savings
The same thing happens every time any proposal for changing the future tax deductability of retirement accounts is raised. It is immediately spun as “they are coming to take your money”.
1.) Obama has now lowered "the rich" from $250K to $150K. It is not difficult for a two income family to make over $150K per year.
2.) Let's assume rich only use these plans, the government's answers is to penalize the families and break a promise. One would logically think, what can we do to make 529 more appealing to middle class. The big problem with these plans is they are not transferable from state to state.
ayep
so much for my roth
you hit the salient point, and will be proven correct.
hide and watch
Entirely agree. What the left defines as ‘rich’ is beyond comprehension. Rich, are those people who can pay to dine with the Obamas at $25,000/plate or more without thinking twice about it. Rich means you fly on NetJet, and can shop at Tiffany's without asking what the price is. This is a definition that fits many ‘treasured’ Democrat donors, including the Hollywood crowd. If these people put money in a 529, it's probably because their accountants spend their time finding every possible tax shelter - not because they have to worry about how they are going to pay for the children's education.
I grew up in a 700 sq/ft house and my father didn't finish high school. He worked hard, my mother worked, and I worked hard to get a professional education. I am fortunate, and I do OK, but am clearly not rich. I have taken maybe six weeks total vacation in the past 10 years, and I don't care about buying ‘stuff’ just to have it. These are my choices, and another choice I made was to put money away in a 529 for my child's education, and the only thing this money will ever be used for is that. Now they want to tax that? How and why am I an elitist rich guy that needs to ‘pay my fair share’? What is it with these people? Why should I not be able to make a personal choice to do what I think is best for my children?
The left’s idea of fairness is to punish those who've made good choices, and to pour hot oil down onto those who have endeavored to try climbing the wall to a better life.
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