Did anyone see the proposal to tax 529 withdrawals?

[ICF]

This was not initiated by Congress! It was a desperate attempt to polish a very tarnished image and cause more division among the "haves" and "have nots" hoping to build up a base of voters for the next election. Anyone who believes it was meant to help the middle class has the their head buried in the sand.

really nice attempt there to make this political, with the slam on the POTUS.

 

[manning]

Free College. How to pay for "free"?

You place a tax on new 529's

So much for free!

 

[TwoMisfits]

really nice attempt there to make this political, with the slam on the POTUS.

While not the nicest way to have phrased it, the poster was clarifying a point of the thread that was getting confused.

This entire "tax the 529s" was a White House only initiative (and so far, has zero traction anywhere else). So, you should take that into consideration accordingly.

And with zero traction in Congress, it will not pass. However, if parties change in Congress (and the White House remains in current party control), that could change (2016 and beyond). Usually ideas are always thrown out as trial balloons before they are ever acted upon later. It's been thrown out now...

 

[Dakota731]

with the slam on the POTUS

That's where the initiative for the tax and the "free" college ideas came from. Are we getting so politically correct in this country that we have to lie about where bills are coming from? To say that Congress thought up the idea is a blatant untruth to protect an agenda. How can you say this thread is anything but political when it concerns an idea straight from a State of the Union address? It is getting almost comical how we have to word things as not to place blame on an individual, but what ever happened to responsibility for your ideas?

 

[Iowajes]

This was not initiated by Congress! It was a desperate attempt to polish a very tarnished image and cause more division among the "haves" and "have nots" hoping to build up a base of voters for the next election. Anyone who believes it was meant to help the middle class has the their head buried in the sand.

You do realize the current president has no more "next election". He can come up with any idea he wants. Future democratic candidates will distance themselves from those ideas if they don't like them.

If the plan goes anywhere, it is because there is support in Congress for it.

 

[Dakota731]

Haven't you ever heard of legacy? Politicians want to remembered for something like "free" college not for a health care system that was a failure from day one.
It's not going to go anywhere. Even the most naive of voters are now waking up and starting to realize that someone has to pay for all that others are getting for free, and it almost always falls to the middle class.

 

[GOOFY D]

It's just another way of "redistributing the wealth". Responsible families who sacrifice and save are expected to shoulder some of the burden for those who didn't . Thankfully I don't think it will pass.

Isn't that the Obama way?

 

[MomToOne]

Isn't that the Obama way?

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I know it's not just you GOOFY D. But this thread seems to be becoming very political and not everyone shares the same opinions. Perhaps the discussion should be kept to just the 529 change that was proposed, and not turn this into an Obama bashing, or health care bashing, or congress bashing.

 

[ellochka]

If this passes, what would make investing in a 529 any different than just investing using a regular brokerage account?

Not that I believe it would pass, but it would still be different than a regular brokerage account. With a taxable account you get a tax bill every single year even if you don't take any money out. Dividends, capital gains (gotta love short term gains!). This will be taxed when the money is taken out.

 

[ellochka]

The really rich pay people to advise them how to structure their income/assets to maximize financial aid, or they use 529 plans for multi-generational wealth transfer.

Yes, I have seen some info on how to do that. People like me who have their $15K in a 529 may think the legislation is designed to slam their investments, but we don't realize that most money in the 529s are not ours. It's the people who use them to optimize taxes - have max $400K contribution plus what it grew to set to every family member (including adults who don't plan to go to college - you can change beneficiaries later).

 

[tnd]

Apparently there was bipartisan hatred for this idea and it has been scrapped (at least for now): http://www.washingtonpost.com/busin...675-11e4-a2b2-776095f393b2_story.html?hpid=z1