Students across Iowa are into a new school year. Meanwhile, parents gear up for the hustle and bustle of extra-curricular activities, homework schedules and school events.
Whether sending off a kindergartner to the classroom or a high school senior, all parents share something in common. They want their children to achieve their fullest potential.
For all the rewards that parenting brings, the joys don’t come without sacrifice. Parents devote their time, energy and financial resources to do what’s best for their children.
Carving money out of the household budget to save money for college is one way for parents make an investment in their children’s future.
As chairman of the tax-writing Senate Finance Committee, I want to help Iowa families make this important investment for their kids. That’s why I advocate public policies that make it easier for parents to stretch their hard-earned dollars to help their children afford a college education.
When Congress passed the landmark 2001 tax relief laws, lawmakers again put their stamp of approval on using the tax code as a vehicle to help parents put money away for college.
Five years ago, I secured a measure that allows families to make tax-free withdrawals from state-sponsored college savings plans for higher education expenses. The tax-advantaged plans are known as 529 plans for the federal tax code section which created them.
Since creation of the tax-advantaged savings tools, these state-sponsored college savings plans have grown in popularity. More than $1 billion is invested in College Savings Iowa.
However, uncertainty clouded the long-term benefits of this college savings tool because the provision was scheduled to expire in 2010.
For the last year, I have worked to make the tax-free withdrawal savings provision a permanent fixture in the federal tax code. My efforts prevailed just as the new academic year got underway. The college savings incentive is included in the recently enacted pension reform law signed in August by the president.
This ought to help make investment in higher education savings even more appealing for parents in Iowa and all over the country. By making this tax-free withdrawal provision of the so-called 529 plans permanent, Congress has removed a cloud of uncertainty to help parents plan ahead and pave a sunny future for their children.
Public policy that gives parents more opportunities to grow education savings makes all the sense in the world. Starting a reservoir of savings sooner rather than later for higher education will pay off big-time when it comes time for young graduates to cross the bridge from high school to college.
As kids head back to school, parents can get a head start on saving for their future by taking advantage of these now-permanent college savings tools.