Financial Planning News – 529 Plans and Qualified Charitable Distributions – Alex III

Marilyn Brohm |

On December 18 the Bipartisan Budget Act of 2015 was signed. Included in the legislation were a couple of minor, but helpful, financial planning changes.

529 College Savings Plans

  • The purchase of laptops, computers, and related technology and services will now be qualified as higher education expenses when purchased for use by the beneficiary of a 529 college savings plan during any years the beneficiary is enrolled at an eligible education institution – this change is retroactive for anyone who purchased these items on or after January 1, 2015.
  • When a 529 plan distribution is used to pay college tuition that is subsequently refunded, and thus not actually used for college (which would render the distribution ineligible for tax-free treatment after the fact), the new legislation will permit these amounts to be re-contributed back to the 529 account within 60 days of the refund.

Qualified Charitable Distributions (QCDs) from IRA accounts

  • The QCD provision is now permanent. In past years, Congress has approved QCDs only for one calendar year at a time.
  • QCDs are IRA distributions paid directly to a charity, and the IRA owner must be over 70 ½ years old at the time of the distribution.
  • Generally, clients who might benefit from QCDs are those 1) unable to itemize deductions via Schedule A and/or 2) have an adjusted gross income under ~$45,000.
  • There are other restrictions and nuances, so we recommend you speak with your tax professional first.