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05/20/2024 12:57 PM
Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20230&cosponId=42253
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House Co-Sponsorship Memoranda

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House of Representatives
Session of 2023 - 2024 Regular Session

MEMORANDUM

Posted: March 7, 2024 05:23 PM
From: Representative Greg Scott and Rep. Steve Samuelson
To: All House members
Subject: Tax-Free Rollovers from PA-529 Account to Roth IRA
 
The PA-529 program has a proven track record of success.  It has helped families save for college and career education, with more than 265,000 accounts that are worth $6.8 billion in contributions and investment growth. A student may end up with leftover money in their 529 account for a variety of circumstances, including not finishing school, receiving grants or scholarships, transferring to a less expensive university or degree program, or other reasons. One estimate suggests that about 10 percent of families have leftover funds in their 529 accounts.
 
A recent change to federal law permits tax-free rollovers from 529 accounts to Roth IRA accounts up to a lifetime limit of $35,000.  While this change exempts the rollover amount from federal taxable income, it remains taxable in Pennsylvania under current law.
 
Therefore, we're introducing legislation to exempt such rollovers from being subject to the Pennsylvania personal income tax. Our legislation will not only give Pennsylvania taxpayers more flexibility for using leftover 529 funds, but it will also add one more option to help residents save for retirement.
 
Please join us in co-sponsoring this important bill so that we may ensure families can make use of the full spectrum of PA-529 benefits.



Introduced as HB2119