In Obama's pledge and determined effort to fundamentally transform America, he's hard at work with new ideas we'll hear about tonight.
Under current law, earnings growth in 529 plans is tax-free if account distributions are used to pay for college tuition and fees. The Obama plan will tax earnings in these accounts even if they are used to pay for college tuition and fees.
These accounts are commonly used by middle class families. There are about 12 million 529 accounts open today, and they have an average account balance of approximately $21,000. Most 529 plans permit monthly contributions as low as $25 per month.
Well, this makes a plain, cold liar out Obama, and not once, but twice. First, the college savings accounts were supposed to be similar to an IRA in being "invested" now, and tax free on the back end to put a kid through college...and of course...that was never going to be enough for most people anyway. Even at 100% tax free status, as promised.
Second.. He did swear (as another President once did with "Read my lips...") that he wouldn't rape more dollars from the people hurting the most and who can least afford to give anything. This is especially true for those folks that eyed this with relief, as one thing going well for their kid's future ..but now?...not so much.
Indeed.. Transformative Change. We've had it alright, and like the protaganist in Apocalypse Now with the topic of wanting missions? We'll likely never want to see another, again.
So, sorry to break it to parents...... Our President has determined your best efforts to save for a child's future now belong, in part, to him. Better luck, next promise?
I've tried replying to this thread 3 times and I am just to damn mad to go very far with it!
My ex and myself have one of these accounts set up for our daughter who graduates highschool in 2 years!
Can't really add much more because some of the language that keeps popping in my head will just get me in trouble......
talk with a cpa
see about cost in dealing with transfers
If you have to.. see about paying for full summer college classes for her or weekend slash online classes
before the new law comes into effect
You are right because this is wrong, so wrong it is a redistribution of wealth again
The money is probably going to pay for the free college everyone was excited about
My ex, works as a CPA at a local firm. She is an Obama lover, err was an Obama lover? Anyhow, we have an amicable relationship ONLY when it comes to discussing things in regards to our daughter.
Even if this does upset her, I would never know about it. But hey! It does give me some ammo if she ever does try to piss me off?
I've tried replying to this thread 3 times and I am just to damn mad to go very far with it!
My ex and myself have one of these accounts set up for our daughter who graduates highschool in 2 years!
Can't really add much more because some of the language that keeps popping in my head will just get me in trouble......
One of the reasons cited for doing this is to extend the American Opportunity Tax Credit. This partially refundable tax credit has a maximum deduction of up to $2500 and is set to expire in 2017. The AOTC starts phasing out based on income starting at $80,000.
Other reasons are to exempt Pell Grants, which go to low income families and correct the taxation issues with forgiveness of student loans (currently, if a student loan is forgiven, it's considered income and the individual gets hit with a massive tax burden).
There's a few problems with 529 college savings accounts that I recall learning in my tax classes. One of them is that they are frequently abused at the higher levels of income earners as the amounts that can be placed into these accounts can be very large though the IRS tries to catch that abuse. Another issue, particularly for families that could normally take the AOTC, is that paying tuition through a 529 plan actually impacts the ability to take that tax credit. Depending on the family's effective tax rate and etc, that could actually mean that, by having a 529 plan and using it to pay college tuition, they are losing possible tax credits.
I'm honestly not sure how I feel about this potential change to 529 plans as I do think that there is going to be an impact for those families whose incomes do land between that $80-250k range (aka middle class).
I've tried replying to this thread 3 times and I am just to damn mad to go very far with it!
My ex and myself have one of these accounts set up for our daughter who graduates highschool in 2 years!
Can't really add much more because some of the language that keeps popping in my head will just get me in trouble......
I'm so sorry to hear that you have money in this. We should be able to feel solid that the regulations set on something like this, and meant to apply for decades to come (after all, these are designed to build and disburse a few years to 20+ years after beginning) would be held to.
How many would have put a dime into this scam if they'd said 'it MAY not be tax free..forever'? It would have failed utterly and totally on the spot..so they either lied to our faces when they were established or they've just decided the "Full Faith" of the United States Government isn't worth a wooden nickle.
I can't imagine the rage and feeling of gut punch you must be feeling. How much of what had been meant for a child...now goes to the IRS anyway?
These criminals need to get a handle on their spending. It'd be called malfeasance on outright criminal levels in ANY OTHER context. Here? We just accept it..and they LOVE it.
Last Edit: Jan 20, 2015 21:05:29 GMT -6 by Deleted
The White House said Tuesday it is dropping a proposal to scale back the tax benefits of college savings plans amid a backlash from both Republicans and Democrats.
President Barack Obama made the proposal last week as part of his State of the Union address. It was part of Obama's plan to consolidate and simplify a sometimes confusing array of tax breaks for college students.
Resistance from Congress was swift. Republicans publicly criticized the plan, and aides said House Democratic Leader Nancy Pelosi pushed senior administration officials to drop it as she flew with the president aboard Air Force One from India to Saudi Arabia.
Other Democrats also privately weighed in against the plan, including Rep. Chris Van Hollen of Maryland, the top Democrat on the House Budget Committee, and Sen. Charles Schumer, D-N.Y.
A White House official said Tuesday the proposal had become a distraction.
"We proposed it because we thought it was a sensible approach, part of consolidating six programs to two and expanding and better targeting education tax relief for the middle class," said the White House official. "Given it has become such a distraction, we're not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support."
The officials spoke on condition of anonymity because they were not authorized to be quoted by name.
Obama's plan would reduce the tax benefits of future contributions to the popular 529 college savings plans. Current accounts would have been grandfathered, so existing funds could still grow and be withdrawn, tax-free.
The administration said all the additional tax revenue would have been used to help expand and make permanent a $2,500 tax credit that families can use for education expenses. Under current law, the tax credit is scheduled to expire at the end of 2017.
Contributions to college savings plans are not tax-deductible at the federal level. But once the money is invested, it can grow and eventually be withdrawn with no tax on the earnings, as long as the money is spent on tuition, fees, books and supplies needed to attend postsecondary school.
The savings plans, which are sponsored by states, can also be used to prepay college tuition.
About 12 million families take advantage of college savings plans. About half were held by families making more than $150,000, according to a 2012 report by the Government Accountability Office.
About 30 percent of plans were held by families who make less than $100,000, the report said.
The White House said Obama's proposal to scale back the tax benefits for savings plans was a small part of his overall plan to cut taxes for the middle class and to make college more affordable. Obama is also proposing a $60 billion plan to make the first two years of community or technical college free.
"The President's plan has the puzzle pieces necessary to bring the middle class back, but this particular piece didn't fit," Schumer said in a statement.
Earlier in the day, at a Capitol Hill news conference, House Speaker John Boehner, R-Ohio, called on Obama to abandon his plan for the college-savings account.
"Five twenty-nine plans help middle class families save for college. But now the president wants to tax those plans. It's another example of this outdated, top-down approach when our focus ought to be on providing opportunity for all Americans," Boehner told reporters. "So for the sake of middle class families, the president ought to withdraw this tax increase from his budget when he submits it soon."
Obama is scheduled to release his budget proposal Monday.
To sum it it
They got a lot of F-U comments back That would have been 2016
Odds are either bankers complained or voters complained
This is somewhat Clintonesk in that it will also be a retroactive tax increase and at a higher rate I might add. This tax money will go to offset the cost of "free" college. So now you can pay for everyones "free" college instead of your own childs.
I think the Democrats realized that College Savings Accounts weren't "rich people scams" the way they hoped they could sell to us. There is a LARGE % formed by middle class folk who are just about on their last nerve of trust in any form for this Government.
Burning them on THAT promise, to literally rob them as sure as a junkie hunting a crack high....may have been the last straw of tolerance for too many to risk.
That's my take, as this one hit hard and it hit deep. (It's for the children! ! ! .....how many times have liberals screamed it while taking things from us by force? Well.. This WAS for the children, Honest to God...and the people weren't in the mood for this, IMO.)