Does anybody else think that 529 account deposits

[dawgman]

should be federal tax deductible if you have an income below ~$125,000 per year? (or indeed any college savings account, but only if used for college not private k-12 school)

I think a lot more people would save for their kids futures if there were an incentive like that. It seems crazy that some of the things that are deductible are but this type of savings isn't.

Education should be a national value.

[Oregone]

1. Up here in the North, they actually have some minimal matching (and some tax-deductions)

When I was getting my Social Insurance number the person helping me brought this up. I felt like I was in a twilight zone episode for a moment. I never remembered hearing about this in the US (maybe I'm wrong). The contributions are not tax-deductible yet (but the growth is, as well as government grants):


The Amount of the CESG

On the first $500 you save in your child’s RESP, the Canada Education Savings Grant will give you:

* up to $200, if your net family income is $37,885 or less;
* up to $150, if your net family income is between $37,885 and $75,769, or;
* up to $100, if your net family income is more than $75,769.

The family net income amounts are updated each year based on the rate of inflation. Income amounts shown are for 2008.

When you save more than $500 annually, the Canada Education Savings Grant could add up to $400 on the next $2,000.

[dawgman]

2. That's fantastic.

I can't believe that there is no program in place to encourage parents to save for their children's education in this country.

[TechBear_Seattle]

3. They already have a lot of tax advantages

Most states allow you deduct contributions to a 529 from state taxes, and the investment return is tax-free. Money put into a 529 exits your estate (because 529 plans are technically trusts) so there can be a lot of benefit for you to set them up; at the same time, the money does not belong to the beneficiary which means it will not cause problems when the recipient files for student loans or need-based scholarships.

I agree with your thought process, and I certainly wouldn't mind if contributions were tax deductible at the federal level (the state deduction is useless to me, as Washington has no state income tax) but there is already a lot of incentive to set up a 529.

[dawgman]

4. I am a WA state resident as well.

I know the return is tax free.

I still think that contributions should be deductible for anyone who sets them up under a certain income level.

There really is no good reason they are not.

[dawgman]

5. Kick