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Important News: Federal legislation includes changes to Section 529 college savings plans

Jun 29, 2018

The federal tax reform bill, which was signed into law on December 22, 2017, includes provisions related to Section 529 college savings plans. Specifically, language in the bill allows distributions used for up to $10,000 of tuition expenses at a public, private or religious elementary, middle, or high school per student per year from all Section 529 college savings plans and rollovers out of 529 college savings plans into Section 529A ABLE accounts to occur free of federal tax. The State of Oregon considers rollovers from its 529 college savings plan into Section 529A ABLE accounts to occur free of state tax.

Note for Oregon taxpayers: The State of Oregon’s tax law defines distributions related to K-12 tuition as qualified withdrawals, but does not extend the state tax advantages to these distributions. This means that, for Oregon taxpayers, the earnings portion of any distribution from any 529 plan to pay for tuition expenses at a public, private or religious elementary, middle, or high school, or any portion of the distribution deducted from state taxable income at the time of contribution, will be subject to Oregon income tax.*

*State tax treatment of withdrawals for K-12 (kindergarten through 12th grade) tuition expenses is determined by each state in which you have taxable income. Please consult a qualified tax advisor for further guidance for your particular situation.


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