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ARIZONA STATE SENATE
Fifty-Fourth Legislature, First Regular Session
AMENDED
family college savings program; treasurer
Purpose
Expands the definitions of qualified higher education expenses and qualified withdrawals to conform to the federal Internal Revenue Code (IRC).
Background
The Arizona Commission for Postsecondary Education (ACPE) administers the Family College Savings Program (Program) and the Family College Savings Program Trust Fund to allow individuals to save for educational expenses for a designated beneficiary. Investments in Program accounts grow on a tax-deferred basis and can be withdrawn free of federal and state taxes if used for the designated beneficiary's qualified higher education expenses (Arizona 529 Plan and 26 U.S.C. § 529).
Current statute defines qualified higher education expenses as a designated beneficiary's: 1) tuition, fees, books, supplies, room and board, and equipment required to enroll at or attend an eligible higher education institution; and 2) special needs services expenses if the expenses meet federal requirements and are incurred in connection with enrollment or attendance. A qualified withdrawal is an account withdrawal for the designated beneficiary's qualified higher education expenses (A.R.S. § 15-1871).
In December 2017, the Federal Tax Cuts & Jobs Act expanded the federal definition of qualified higher education expenses to include reference to withdrawals, up to $10,000 per year, used for tuition in connection with enrollment or attendance at an elementary or secondary public, private or religious school (H.R. 1, 115th Congress, 2017).
The fiscal impact to the state General Fund associated with this legislation is unknown at this time.
Provisions
1. Expands the definition of qualified withdrawal to include account withdrawals for tuition less than $10,000 to enroll or attend an elementary or secondary public, private or religious school of the designated account beneficiary.
2. Expands the definition of qualified higher education expenses to include:
a) purchase of a computer, peripheral equipment, computer software, internet access and related services to be primarily used by the beneficiary when the beneficiary is enrolled at an eligible education institution and if the expenses meet the definition in section 529 of the IRC; and
b) tuition to enroll or attend an elementary or secondary public, private or religious school.
3. Allows, through December 31, 2025, up to $15,000 of an account to roll over to an Achieving a Better Life Experience Act Account on direction of an account owner.
4. Modifies, from College Savings Plan to Family College Savings Program, the article heading for statutes relating to the Program.
5. Makes technical and conforming changes.
6. Becomes effective on the general effective date.
Amendments Adopted by Committee
· Removes the transfer of the Program from the ACPE to the State Treasurer.
Senate Action
HEWD 2/18/19 DPA 6-0-1
Prepared by Senate Research
February 25, 2019
JO/LB/gs