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Improvements for 529 Plans with PATH Act of 2015

On December 18, 2015, Congress passed the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), which introduced certain improvements to 529 plans.  Account owners are encouraged to see their tax advisor to understand the implications of these changes.

Computers as qualified expenses: The PATH Act permanently expands the definition of qualified higher education expenses to include expenses for the purchase of computer or peripheral equipment (e.g., printers), computer software, or Internet access and related services, if such equipment, software, or services are to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible education institution. This change is retroactively effective for tax years beginning after December 31, 2014.

Re-contribution of refunded qualified higher education expenses: In the case of a beneficiary who receives a refund of qualified higher education expenses from an eligible educational institution, the refunded amount will not be includible in the beneficiary’s gross income if such amount is re-contributed to a 529 plan account of the same beneficiary within 60 days of the refund. The re-contributed amount cannot exceed the amount of the refund. It is the responsibility of the account owner to keep all records of the refunds and subsequent re-deposits. You will need to provide specific information about the re-contribution when you send the re-deposit. If you believe you have received a refund that may qualify for the above re-contribution, please call us at 866-574-3542.


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