State SealARIZONA HOUSE OF REPRESENTATIVES

 

SB 1349: family college savings program

PRIME SPONSOR: Senator Livingston, LD 22

BILL STATUS: Education

                               

 

Overview

☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal NoteModifies definitions of qualified higher education expenses and qualified withdrawals to conform with recent adjustments to the federal Internal Revenue Service code (IRC) section 529.

History

Federal law defines a qualified tuition program as a program established and maintained by a State or agency under which a person may make contributions to an account which is established for the purpose of meeting the qualified higher education expenses of the designated beneficiary of an account (26 U.S.C. § 529).

The Arizona Family College Savings Plan is a qualified tuition program sponsored by the State of Arizona, which is administered by the Commission for Postsecondary Education. This plan allows individuals to save for future educational expenses for themselves or for another beneficiary. When individuals invest in this account, their investment can grow tax-free and monies can be withdrawn tax-free provided that they are used for qualified higher education expenses (A.R.S. § 15-187(B)).

Presently, qualified higher education expenses are defined as tuition, fees, books, supplies, room and board and equipment for enrollment or attendance of a designated beneficiary at an eligible education institution but does not specifically mention computers or computer related equipment. Similarly, qualified withdrawal means a withdrawal from an account to pay for qualified higher education expenses of a designated beneficiary of the account (A.R.S. § 15-1871).

In 2017, the Federal Tax Cuts and Jobs Act expanded the federal definition of qualified higher expenses to include not more than $10,000 in expenses incurred during the taxable year used for tuition of enrollment or attendance at an elementary or secondary public, private or religious school (H.R. 1, 115th Congress, 2017).

Provisions

1.       Changes the heading of Title 15, Chapter 14, Article 7, from College Savings Plan to Family College Savings Plan. (Sec. 1)

2.       Expands the definition of qualified higher education expenses to include:

a.       Expenses to purchase a computer, computer related services and equipment that are used by the beneficiary during the years the individual is enrolled at an eligible educational institution and allowable if expenses meet the definition of qualified higher education expenses in accordance with section 529 of the IRS code; and

b.       Tuition to attend an elementary or secondary public, private or religious school pursuant to section 529. (Sec. 2)

3.       Modifies the definition of qualified withdrawal to include tuition less than $10,000 to attend an elementary or secondary public, private or religious school. (Sec. 2)

4.       Allows an account owner to roll over $15,000 to an Achieving a Better Life Experience Act Account through December 31, 2025. (Sec. 3)

5.       Makes technical and conforming changes.  (Sec. 2 and 3)

 

 

 

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Fifty-fourth Legislature                               SB 1349

First Regular Session                    Version 1: Education

 

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