The College Savings Plans Network (CSPN) monitors federal legislative and regulatory activities and promotes legislation that will positively affect Section 529 plans. Building upon the success achieved in 2006 with passage of the Pension Protection Act, legislation that included a provision to make permanent the income tax exclusion for qualified distributions from Section 529 college savings programs, the National Association of State Treasurers (NAST) and CSPN have launched a new phase of federal advocacy.
In the 117th Congress, NAST and CSPN’s primary goal is to make college and career training more affordable and accessible to all. To help us achieve this goal, our major legislative priorities are:
1. SAVERs Credit – Congress created the Saver’s Credit in 2001 to encourage middle- to low-income individuals to save for retirement. In order to increase access for low and middle-income students and reduce their reliance on student loans, NAST & CSPN encourage Congress to include contributions to Section 529 qualified tuition programs to the list of deferrals or contributions that qualify for the Saver’s Credit.
2. Encourage Saving for College at the Workplace – The workplace is often where Americans make decisions about saving. Tax code incentives that promote employer contributions into the retirement plans of employees have proven to be an effective method to increase retirement savings. Tax code incentives that similarly promote employer contributions to Section 529 Qualified Tuition Programs will be an effective method of encouraging continued education among employees. We believe employers could have a broader impact on the long-term financial wellness of Americans if they are given a role in assisting and accommodating participation in a 529 plan.
3. Simplify Student Aid and 529s to Encourage Saving – An overwhelming majority of 529 plan administrators view the perceived impact of a 529 account on federal financial aid as the top regulatory obstacle to American families fully utilizing 529 plans. The CARES Act included provisions to simplify the federal financial aid process which will assist 529 plan participants. NAST & CSPN urges Congress to take further action to revise the Higher Education Act (HEA) to change the current federal financial aid methodology to: (1) exempt the value of all assets in all 529 accounts held for the benefit of a student from counting as parental assets in determining a family’s expected contribution and, (2) to the extent CARES does not address the issue, exempt the value of all 529 plan distributions, including from accounts held by grandparents, noncustodial parents or states and charities, from counting as income when distributions are used towards eligible expenses.
4. Freedom to Invest in Tomorrow’s Workforce – Although 529 plans may be used for many certificate programs and qualified apprenticeship programs, meaningful gaps remain. We support legislation which would expand the use of a 529 account to recognized postsecondary credential programs under the Workforce Innovation and Opportunity Act. The programs included in this initiative provide the basis for developing competencies in many of the technical skills and jobs that employers find increasingly difficult to fill.
529 Plan Disclosure
CSPN, the states, and their partners in the financial services industry are firmly committed to clarifying and enhancing disclosure for 529 plans. CSPN has worked with the Municipal Securities Rulemaking Board, the National Association of Securities Dealers, and the Securities Exchange Commission in developing meaningful disclosure for investors. To that end, CSPN has adopted a detailed set of Disclosure Principles (Disclosure Principles Statement No. 1, or DP1; Disclosure Principles Statement No. 2, or DP2; and Disclosure Principles Statement No. 3, or DP3) that provide enhanced comparability of information that investors should consider when determining which 529 plan best fits their investing goals and needs.
Every state and the District of Columbia have implemented DP1 & 2 in their 529 plan offering materials. On December 9, 2008, CSPN approved DP3 and it is expected that plans will implement DP3 as their offering materials are updated.
DP1 provided unprecedented standards of disclosure for entities exempt from the registration and reporting requirements of the federal securities laws. Because the states and financial services firms are committed to ensuring the availability of the best information for investors, DP1 provided guidance on standards for summary information, risk factors, fees, federal and state tax information, performance data, sample tabular presentations and a host of other areas of disclosure.
Based upon feedback from the SEC, the MSRB, and others, the CSPN membership adopted DP2 to enhance and clarify certain disclosure matters related to the comparability of Section 529 plans to one another. For example, DP2 provides an enhancement of the table of contents or “locator” concept. Because many 529 plans provide disclosure through more than one document, the CSPN membership believed it important to ensure that each investor would be able to compare plans in an efficient manner. Having a global locator within a 529 plan’s offering materials will allow an investor to quickly find key disclosure items, such as fees and costs.
The Disclosure Principles focus on improving comparability between 529 plans, including precise, uniform tables to show fees and costs associated with these plans. The format adopted mirrors those required and adhered to by all registered mutual fund companies. Following discussions that CSPN had with officials from the US Dept. of Treasury about the intended use of 529 plans, CSPN added anti-abuse language to the Disclosure Principles as part of DP3.
Disclosure Principles Statement No. 1 Adopted December 2, 2004 (Adobe PDF)
Disclosure Principles Statement No. 2 Adopted July 26, 2005 (Adobe PDF)
Disclosure Principles Statement No. 3 Adopted December 9, 2008 (Adobe PDF)
Disclosure Principles Statement No. 4 Adopted December 17, 2009 (Adobe PDF)
Disclosure Principles Statement No. 5 Adopted May 3, 2011 (Adobe PDF)
Disclosure Principles Statement No. 6 Adopted June 2017 (Adobe PDF) SUMMARY OF CHANGES MADE IN DP6
529 Plans: Helping Families Save for Higher Education
529 Plan Governance Principles