Senators Burr, Casey Introduce College Savings Recovery Act
Bipartisan bill gives families greater flexibility, control of their savings.
Today, Senator Richard Burr (R-NC), Ranking Member of the Senate Health, Education, Labor and Pensions (HELP) Committee, and Senator Bob Casey (D-PA), Chair of the Senate HELP Subcommittee on Children and Families, introduced the College Savings Recovery Act, bipartisan legislation to give families greater control over their savings, allowing families to transfer unused funds in their college savings accounts, also known as 529 accounts, into a Roth IRA without being penalized.
“College savings accounts play an important role in the financial planning of families across the nation,”said Senator Burr. “We should encourage parents to save for their family’s future, while recognizing that they can’t always predict what the future holds. Their child might not decide to pursue a higher education. This legislation allows families to transfer unused or excess funds from a college savings account into a Roth IRA without being unfairly penalized. I’m proud to work with Senator Casey on this commonsense bill, which will give families greater flexibility on their savings for years to come.”
“An early start on saving for retirement can mean the difference between peace of mind and insecurity for retired Americans,” said Senator Casey. “This bipartisan bill will allow parents to put unused savings for their children’s education into their retirement account, rather than face a penalty. I’m proud to work with Senator Burr on legislation to encourage American families to invest in their own retirement.”
Background:
College savings accounts, or “529 accounts,” help families better prepare financially for the cost of sending their child to college. This successful program allows families to put their hard-earned money into tax-free accounts to later assist them in the costs of tuition, fees, books, and room and board. However, under current law, families are penalized for withdrawing unused, or leftover funds, from their “529 accounts” should their child decide against pursuing a higher degree, or complete their education without using all funds in the account.
The College Savings Recovery Act, which was originally included as part of Senator Burr’s Boost Savings for College Act in 2017, would give families greater control over their own savings and allow them to transfer these unused savings into a Roth IRA.
