Aug 17 2006
Sensible 529 Reform in Pennsylvania, but Law Still Quirky
On the other hand, this summer brought a dramatic — and frankly, surprising improvement for the formerly suffering residents of Pennsylvania thanks to an initiative from State House Representative Mike Turzai. (R. Bradford Woods), PA residents can now deduct up to $12,000 in 529 contributions to a 529 college savings program. Moreover, the bill also eliminated the draconian rule that would have prevented PA income tax advantages for 529s sponsored by other states. That means contributors get the state deduction, and beneficiaries may make both federal and state tax-free withdrawals from any program, not just the PA sponsored program from Lincoln Financial out of Philadelphia.
There are still severe restrictive deficiencies in 529s. Why investors can’t simply be allowed the same, entire universe of investment options open to them ordinarily in any run of the mill account is beyond me. Instead, investors are shoeboxed and prevented from accessing alternative investments and management styles. With that in mind, there’s still a lot of reform and simplification due for 529s.
But PA resident’s options are now greatly expanded. No longer are they held hostage by PA tax considerations.
Incidentally, those of you looking for a comprehensive book on how to afford paying the ever mounting costs of college — consider Paying for College without going broke, linked to the image above in this post. Having read more than my share, it is IMO the best and most comprehensive starting point.
