West Virginia State Treasurer John Perdue, with honored guest Governor Jim Justice, announced the launch of a new savings program today at the State Capitol. The West Virginia Achieving a Better Life Experience program, known as WVABLE, will provide people with disabilities an opportunity to save and invest without jeopardizing needs-based public benefits.
“I’m excited this type of savings program is now available to those who need it most here in West Virginia,” said Treasurer Perdue. “This is an important step toward empowering more individuals in our state to plan for their financial future.”
WVABLE helps individuals with disabilities put aside money for qualified expenses, such as rent, transportation, education and training. Individuals may save up to $15,000 per year in a WVABLE account, with earnings accumulating tax-free. Individuals must have developed the disability before the age of 26 to qualify.
“This WVABLE plan will allow me to have more control of my life with the day-to-day freedom to take care of medical emergencies and unexpected home repairs,” said Kevin Smith, one of the first people to sign up for the plan. “The difference between me and others in the community is that they can save for those emergencies, but I have and I have always had to watch the balance of my bank account due to income limits because I receive SSI and Medicaid.”
Prior to passage of the ABLE Act, individuals receiving government benefits were restricted in the amount of money they could save or invest without losing public benefits, such as Supplemental Security Income (SSI) or Medicaid. Before, financial resources in excess of $2,000 in savings could result in the loss of benefits.
“As a parent of a child with a developmental disability, I can tell you that rolling out the WVABLE program has eased my mind,” said Christina Smith, executive director of The Arc of West Virginia.
“We are thrilled that it is finally available in West Virginia, and I am personally excited that my daughter will now have access to a resource that will enable her to achieve more independence, financial security, and an overall better quality of life,” she added.
A WVABLE account will come with a loadable debit card and have features similar to a checking account, but it is also an investment account similar to a 529 college savings account or 401(k) retirement fund.
“The reason it will be good for the younger generation to have access to this plan is because families could put money in their account for their future and when they get older and are facing the same challenges I am, they will already have money put aside to take care of them,” said Kevin Smith. WVABLE is administered by the West Virginia State Treasurer’s Office through a partnership with the Ohio Treasurer’s Office STABLE program.
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HARTFORD, CT — Denise L. Nappier, having served as State Treasurer for nearly two decades – the longest tenure in modern Connecticut history – announced today that she will not seek re-election this year.
Treasurer Nappier, who was the architect of a comprehensive series of reforms in Treasury operations shortly after she took office as a kickback and corruption scandal enveloped her predecessor, said her administration has “restored integrity and public confidence in the Office of State Treasurer” as she announced her decision.
The five-term State Treasurer reflected on two decades of widely acclaimed financial management that has saved taxpayers hundreds of millions of dollars while initiating ground-breaking leadership on corporate governance issues and consistently “using the financial clout of the Treasury to expand economic opportunity not just for a few, but for all people.”
First elected in 1998, Treasurer Nappier will have served for 20 years when her fifth term ends in January 2019. She was the first African-American woman elected to serve as a State Treasurer in the United States, the first African-American woman elected to a statewide office in Connecticut, and the first woman elected Treasurer in state history.
“For nearly 19 years, this office has promoted the protection of shareholder value and the rights of consumers and workers by strengthening accountability and pursuing prudent and responsible business practices,” Treasurer Nappier said. “The results are striking.”
Connecticut’s pension plans and trust funds, invested by the Treasurer’s Office, have grown from less than $19 billion to more than $34 billion during the Nappier administration, an all-time high. In fiscal year 2017, Connecticut had one of the ten best investment performances among its peers in the nation and during the length of the Nappier administration, the Treasury has achieved investment returns that meet or exceed the average performance of its peers while taking on less risk.
Treasurer Nappier also established a policy – the first of its kind – that recognized the value to the Treasury’s investments and other functions in tapping from a diverse pool of prospective vendors to compete for and earn Treasury business. The Office has an unsurpassed record of doing business with Connecticut-based firms and minority-, women-owned, and emerging firms as well as longstanding majority-owned firms with a demonstrated commitment to improving diversity and inclusiveness.
In Pension Funds Management, the Connecticut Horizon Fund is one such example. It was launched to enhance portfolio returns while providing opportunities for these firms and is now a $1.3 billion public and private markets program.
On the debt management side, Siebert Cisneros Shank was the first woman-owned and African American owned firm and Ramirez & Co. the first Hispanic-owned firm in the history of Connecticut to serve as senior managers for State bond offerings.
In addition to stand-out pension fund investment performance and the comprehensive Treasury reform program that Treasurer Nappier developed early in her tenure, she is perhaps best known for the State’s Connecticut Higher Education Trust (CHET) college savings program and The Big List, which lists about 1.4 million names of individuals and entities that currently may be entitled to as much as $767 million in unclaimed property.
During the Nappier administration, CHET has grown from $18.5 million in assets and 4,000 accounts to more than $3.3 billion in assets and more than 140,000 accounts today. Just last month, CHET Direct was named as one of the nation’s five best college savings programs. More than $1.6 billion in qualified withdrawals – beyond the $3.3 billion in assets – have been taken to cover college costs for approximately 47,000 students attending nearly every public and private college in Connecticut as well as out-of-state schools.
Reforms to the unclaimed property program since Treasurer Nappier took office in 1999 have resulted in $653 million being returned to 298,141 individuals, businesses, organizations and non-profits through June 30, 2017.
Treasurer Nappier has also been a leading voice nationally for responsible corporate governance since she took office, engaging companies in which the state held investments, proposing shareholder resolutions on numerous issues and meeting with corporate leaders and regulators to advance protections for the state’s investments.
Issues that have been the focus of Treasurer Nappier’s efforts as principal fiduciary of the state’s pension funds include establishing independent audit committees on corporate boards, separating the roles of CEO and Board Chair, eliminating excessive compensation for failure by linking pay to company performance, achieving greater diversity among board members, recognizing and mitigating the impact of climate change on companies’ sustainable health, and urging companies to refrain from engaging in international business practices that condone human rights violations.
“There was no doubt in my mind that we had a fiduciary obligation to speak up and stand firm, to urge companies to act in the best interests of their investors – including Connecticut, and to encourage policies on a range of issues that would contribute to their bottom lines and ultimately ours as well,” Treasurer Nappier said.
In her announcement, she expressed appreciation to Connecticut voters, members of the State’s Investment Advisory Council, employees of the Treasurer’s Office, and vendors working with the office through the years. She also cited a range of other accomplishments:
• The Treasury’s Second Injury Fund — a form of workers’ compensation — has not increased the assessment rate for Connecticut businesses for 19 consecutive years, the longest period without an
assessment rate increase in the more than 70-year history of the Fund. As a result, Connecticut businesses and agencies in the private and public sectors have realized an estimated $1.3 billion in
• Through June 2017, $13.4 billion in bonds have been refinanced or defeased, resulting in savings to taxpayers of more than $1.2 billion over the life of the bonds.
• The Short-Term Investment Fund has earned state and local governments $208 million in additional interest income by consistently exceeding its benchmark.
• The Treasury’s asset recovery and loss prevention program, which Treasurer Nappier launched, has recovered approximately $1.4 billion.
Treasurer Nappier also noted the establishment of a Housing Trust Fund for Growth and Opportunity and an Individual Development Account program, enactment of the state’s landmark Gift Card Law to protect consumers from having the value of their gift cards eroded, and initiatives in financial literacy and education as among key accomplishments.
At the conclusion of her term in January 2019, Treasurer Nappier will be the longest serving Connecticut Treasurer since 1818.
She is one of only two individuals to serve as State Treasurer for more than a decade since 1835. The other was Henry Parker of New Haven (1975-86) who served for 11 years. The only other State Treasurers to serve at least six years in the Office since 1835, according to the State Register & Manual, are Joseph Adorno of Middletown (1947-55), Gerald Lamb of Waterbury (1963-70), and Francisco Borges of Hartford (1987-93).
The longest serving State Treasurer in Connecticut history was Joseph Whiting, who served colonial Connecticut for 39 years, between 1679 and 1718. John Whiting then served for 32 years, from 1718 to 1750. Long-serving Treasurers in state history also include Andrew Kingsbury, in office for 24 years (1794-1818), and John Lawrence, who served for 20 years (1769-1789).
Prior to her first election as State Treasurer, Treasurer Nappier served for nearly a decade as Treasurer of the City of Hartford. She was endorsed by delegates to the 1998 Democratic State Convention and won a primary challenge from Frank Lecce with nearly 60 percent of the vote. She defeated then-incumbent Republican Paul Silvester, who was appointed to the office by Governor John Rowland, by 2,684 votes in the November election that year.
Treasurer Nappier was twice named as one of the nation’s 100 Most Influential People in Finance by Treasury & Risk Management magazine and one of the 50 Most Powerful Black Women in Business by Black Enterprise. She was inducted into the National Association of Securities Professionals’ Wall Street Hall of Fame in 1999 and received the Citizens for Economic Opportunity’s Corporate Responsibility Leadership Award in 2002. Treasurer Nappier was inducted into the Connecticut Women’s Hall of Fame in 2011, and received the Public Service Award from the Municipal Forum of New York in 2013 and the Lifetime Achievement Award from Women in Public Finance in 2015. In December 2015, she was named one of the 40 most important people in pensions by Institutional Investor.
PHOENIX (AP) — Arizona State Treasurer Jeff DeWit has been nominated by President Donald Trump to be the chief financial officer at NASA.
If confirmed by the Senate, DeWit said he would resign his statewide elected office, although that could be months from now.
“By the time I get through the Senate confirmation it could be near the very end of my term anyway,’ he said Thursday. “So it’s really good timing.
“I’ve been offered many positions before this but I wanted to wait until at least I’m in the last year of my term, which this basically is now,” DeWit said.
DeWit served as chief operating officer and chief financial officer for Trump’s presidential campaign last year and has a close relationship with the president.
DeWit is a first-term Republican and state law requires that the replacement appointed by Republican Gov. Doug Ducey be of the same party. Ducey said he hasn’t yet given much thought to whom he might pick to succeed DeWit.
DeWit previously said he would not run for a second term as treasurer. Announced candidates for the Republican nomination include state Sen. Kimberly Yee and Tom Forese, an Arizona Corporation Commission member who won the seat in 2014 after serving in the Legislature. DeWit has endorsed Yee but has a fractious relationship with Ducey.
DeWit said he would prefer that a career treasurer employee be named to head the department that oversees state finances until after next year’s election.
“We have some people running for that office right now, and I don’t think it would be fair to appoint somebody that’s running for the office,” he said. “I think that’s kind of putting a thumb on a scale.”
DeWit had been considering running for the U.S. Senate seat being vacated by Republican Jeff Flake, who decided last month not to seek re-election after polling showed his criticism of Trump and a changing Republican Party base made his race unwinnable.
As NASA CFO, DeWit would oversee the space agency’s nearly $20 billion budget. Before running for state treasurer as a political newcomer in 2014, he was CEO of an investment company he founded and worked in financial futures trading. He is married and has three school-age daughters.
He said it is likely the family would need to relocate to Washington, where NASA headquarters is located.
“There’s a lot of exciting things coming for NASA and for our country through that agency,” he said, “and if I can be a part of helping that process I think that’s a good way to serve the country.”
North Carolina Retirement Systems, Raleigh, launched an initiative to handle passive investing in equities, Treasurer Dale Folwell said on a press call Tuesday.
“We are one of the few treasurers in the U.S. that does not have in-house index capabilities,” Mr. Folwell said on the call.
The switch is the result of an initiative started under his predecessor, Janet Cowell, and former Chief Investment Officer Kevin SigRist, who resigned in July. The state treasurer is the sole trustee of the $93.9 billion pension fund.
The internal index program will start with $50 million in cash and $50 million reallocated from Piedmont Investment Advisers, which helped North Carolina make the change. That represents a “slight reduction” in Piedmont’s North Carolina allocation, Mr. Folwell said. It will follow the Russell 2000 index.
Piedmont still has $3.63 billion in passive indexing funds for the pension fund. The rest is managed by BlackRock (BLK), which has $9 billion in U.S. equities and $8 billion in non-U.S. equities.
The ultimate goal is to manage about $12.5 billion in U.S. passive equities in-house, which represents about 30% of the pension fund’s equity holdings and 12% of the overall portfolio.
“This time next year we will be reporting that all of our indexing will be done in-house,” Mr. Folwell said on the call. “As we go further into next year … international passive strategies seems to be a natural place to go next.”
The current plan is to bring all U.S. funds in-house within two years, and then consider the non-U.S. ones in year three, he said.
“This is just an extension of what we’ve been saying all year, which is reducing complexity and improving transparency. In dollar terms we’re going to save fees,” he said, adding that it also allows a little more control over where assets are invested.
The program will be overseen by Rhonda M. Smith, director of the equities program.
WASHINGTON, D.C. – The National Association of State Treasurers (NAST) congratulated Rhode Island State Treasurer Seth Magaziner today for receiving the Council for Economic Education’s 2017 William A. Forbes Public Awareness Award. He currently serves as the Chairman of NAST’s Financial Education and Empowerment Committee, and received the award for his work to advance financial literacy initiatives throughout the country.
In a statement, NAST’s President and Oklahoma State Treasurer Ken Miller said, “Throughout his tenure as NAST’s Financial Education and Empowerment Chairman, Treasurer Magaziner has advanced innovative strategies that improve the financial literacy of residents in his home state of Rhode Island and beyond. His leadership during our recent Treasury Management Symposium provided state treasurers, staff, and hundreds of corporate affiliate members with important insights on the latest programs and strategies that effectively improve the financial education of countless communities. On behalf of the entire organization, I congratulate him for receiving this much-deserved award.”
The Council for Economic Education presented Treasurer Magaziner with the award during the 56th Annual Financial Literacy and Economic Education Conference last week in New York. The award was made possible by the Calvin K. Kazanjian Economics Foundation. In his lifetime, Calvin K. Kazanjian was an ardent supporter of economic literacy programs. Fittingly, entrepreneur William Forbes, for whom this award is named, helped catapult Mr. Kazanjian’s small confectionary company—Peter Paul Almond Joy—into an industry leader.
For more information on NAST’s Financial Literacy efforts please view our Financial Education and Empowerment committee page.
WASHINGTON, D.C. – The National Association of State Treasurers (NAST) today announced it has appointed Shaun Snyder as executive director. Snyder will join the 41-year-old association on October 16, 2017.
NAST President and Oklahoma State Treasurer Ken Miller said, “After a nationwide search, I am pleased to welcome Shaun to our bipartisan association. His strong leadership abilities and proven track record will serve NAST well as we continue to expand our impact to better serve our citizens.”
The NAST Executive Committee chose Snyder following an intensive nationwide search. His job responsibilities will include managing and overseeing all association activities, including membership services, government affairs, corporate partnerships, media outreach and conference planning. He will also direct the staff, operations, and initiatives at the association.
“State treasurers are on the frontline of solving some of our country’s toughest fiscal challenges—from financing much needed infrastructure projects to helping individuals save for the rising cost of college or retirement,” said Snyder. “NAST plays a crucial role in helping state treasurers address these issues by developing best practices and promoting sound fiscal policies, so I look forward to joining this bipartisan association to build on this goal.”
Currently, Snyder serves as the Chief Operating Officer for the American Psychiatric Association, where he is responsible for working with each of the organization’s departments to ensure the association meets strategic objectives in an efficient and effective manner. Prior to joining the American Psychiatric Association, Snyder served in the same role for the Department of Health of the District of Columbia, and has served as Special Assistant to the General Counsel of the U.S. Department of Housing and Urban Development.
Snyder was born in California and spent his childhood in a number of states, including California, Wisconsin, Massachusetts, and Maryland. He received his undergraduate degree in Government and Politics from the University of Maryland, his law degree from the Georgetown University Law Center, and his MBA from The George Washington University. He is licensed to practice law in Maryland and the District of Columbia.
South Carolina’s Future Scholar 529 College Savings Plan reached a major program milestone by exceeding $3 billion in total assets under management.
June 2017 also marked the best June sales month in the 15-year history of the plan.
“We have worked to make Future Scholar one of the best college savings plans in the nation, and exceeding $3 billion in total assets reflects that effort,” State Treasurer Curtis Loftis said. His office administers the program.
“This milestone also demonstrates that more parents than ever understand the importance of investing for their child’s college education, and they are choosing Future Scholar to reach those college investing goals,” he said.
This year Future Scholar is celebrating its 15-year anniversary. Among the growth highlights:
• Total number of accounts has increased from 9,800 to over 134,000.
• Average account size has risen from $8,233 to $20,222.
• Contributions into the plan from South Carolinians have increased 28 percent over the previous year.
Residents of The T&D Region have taken advantage of the savings plan.
As of June 30, 2017:
• Orangeburg County has $8,488,080 in assets in 543 accounts.
• Calhoun County has $2,321,167 in assets in 99 accounts.
• Bamberg County has $1,608,972 in assets in 61 accounts.
Illinois Treasurer Michael Frerichs was in Effingham and Shelby counties recently as part of a larger tour of area communities as he publicized his office’s latest initiatives.
One of those programs, iCash, seeks to pair residents and businesses in Illinois with lost property. Last year, Frerichs says his office hit an all-time high when it came to returning unclaimed property.
“We returned over $155 million,” said Frerichs. “So at a time when the state is not paying its bills, the state isn’t honoring its contracts, the treasurer’s office was writing checks because we think it’s important to get money into the economy.”
Another initiative, the Illinois College Savings program, helps families plan for and prepare children for college-related expenses. Frerichs says since taking office, he has negotiated a drop in the fees charged to participants through one of the state’s two savings plans.
“We cut fees that families were paying on college savings accounts by half,” explained the state treasurer. “Actually, more than half, a 57 percent drop in fees. And what happened when we did that? Morningstar rating service gave us a rating upgrade.”
Following the upgrade, Illinois’ Bright Directions savings program was elevated to one of the top two adviser-sold savings programs in the country.
Since coming into office, Frerichs has also worked on making sure life insurance benefits — more than half a billion dollars worth — are paid out.
“I came in and discovered that life insurance companies that sold policies to people, they died and they never paid out the benefits,” explained Frerichs. “So I think, when that person who had a policy in place dies that money no longer belongs to the insurance company, it belongs to their loved ones. The insurance companies said, ‘No, no. We hold onto it until they come and ask for it.’”
Arising from his audits of two dozen life insurance companies, House Bill 0302 was presented and passed both chambers. The bill would force life Insurance companies to notify beneficiaries going back to 2000 of unpaid benefits and awaits the governor’s signature.
Frerichs was elected as state treasurer in November 2014 after having served as state senator for District 52, which included parts of Champaign and Vermilion counties. Reflecting on his time spent in the General Assembly, Frerichs said the chamber has certainly changed…
Selection from Michael Laris at the Washington Post. View Full Story
The Trump administration, determined to overhaul and modernize the nation’s infrastructure, is drafting plans to privatize some public assets such as airports, bridges, highway rest stops and other facilities, according to top officials and advisers.
In his proposed budget released Tuesday, President Trump called for spending $200 billion over 10 years to “incentivize” private, state and local spending on infrastructure.
Trump advisers said that to entice state and local governments to sell some of their assets, the administration is considering paying them a bonus. The proceeds of the sales would then go to other infrastructure projects. Australia has pursued a similar policy, which it calls “asset recycling,” prompting the 99-year lease of a state-owned electrical grid to pay for improvements to the Sydney Metro, among other projects.
In the United States, Chicago Mayor Rahm Emanuel (D) explored privatizing Midway International Airport several years ago but dropped the idea in 2013, after a key bidder backed away. Transportation Secretary Elaine Chao says such projects should be encouraged.
What’s in Trump’s proposed transportation budget
“You take the proceeds from the airport, from the sale of a government asset, and put it into financing infrastructure,” Chao said. St. Louis is working with federal officials to try to privatize Lambert International Airport, she said.
Officials are crafting Trump’s initiative, and he has yet to decide which ideas will make the final cut. But two driving themes are clear: Government practices are stalling the nation’s progress; and private companies should fund, build and run more of the basic infrastructure of American life.
A far-reaching proposal from the Trump administration earlier this year to take the nation’s air-traffic control system out of government hands was fueled, in part, by frustration at sluggish efforts to modernize technology.
To speed up infrastructure projects, officials are preparing to overhaul the federal environmental review and permitting system, which they blame for costly delays. Trump asked advisers whether they could collapse that process, which he said takes at least 10 years, down to four months. “But we’ll be satisfied with a year,” Trump said. “It won’t be more than a year.”
In a bid for broader support, Trump and some of his advisers have also signaled an openness to raising the gas tax to pay for needed projects. The 18.4-cent-per-gallon levy is the federal government’s main source of highway funds and was last raised in 1993.
The infrastructure initiative is being shaped by White House officials and a task force representing 16 federal departments and agencies. In addition, there is a committee of outside advisers co-chaired by billionaire developer Richard LeFrak, a Trump friend.
LeFrak said the administration’s effort, which is being led by Gary Cohn, director of the National Economic Council, Chao and others, is a sweeping attempt to rethink how infrastructure gets built. LeFrak said the issues are intensely personal for Trump, who spent his career in real estate and sees this as an area where he can make a lasting impact.
“He does think he’s the president to rebuild America. He’s a builder. It’s just logical,” LeFrak said. “He’s highly enthusiastic about this idea and getting it done.”
Critics said Trump and his advisers are putting ideology ahead of the national interest and oversimplifying how the process works.
Public stewards should not be “trying to figure out how to extract maximum value” by selling off government assets or “making huge, multibillion-dollar wagers” that span decades, said Kevin DeGood, director of infrastructure policy at the Center for American Progress, a liberal advocacy group. “Building infrastructure faster and without adequate study or time for community input may be good for developers, but it’s lousy for everyone else.”
Still, there are bipartisan concerns that important projects have been stymied by politics and bureaucracy, and that Washington has been unwilling to allocate the money for needed improvements. A civil-engineering group in March tallied a “$2 trillion, 10-year investment gap” in the nation’s roads, transit systems, bridges, water systems, power grids, parks, ports and schools.
In February, Trump told Congress that he would seek legislation “that produces a $1 trillion investment” in infrastructure and creates “millions of new jobs.” Officials have since said that the plan will probably include $200 billion in direct federal funds, which would be used to “leverage” the larger figure over a decade. LeFrak sees the chance for a deal, noting that Senate Minority Leader Charles E. Schumer (D-N.Y.) also “wants a trillion-dollar program.”
“So you’ve already got two important people — one very, very important person and one very important person — both from different sides of the aisle, who come in favor of this,” LeFrak said.
But on Tuesday, when Trump’s budget proposal was released, Schumer condemned the president’s “180-degree turn away from his repeated promise of a trillion-dollar infrastructure plan,” saying the budget contains deep cuts in spending on roads, transit projects, public housing and more.
“The fuzzy math and sleight of hand can’t hide the fact that the President’s $200 billion plan is more than wiped out by other cuts to key infrastructure programs,” Schumer said in a statement.
Trump administration officials disputed Schumer’s calculations, saying they included budget items that should not be considered cuts. They cited a projected “drop-off” in federal highway funds that could be eliminated as part of the broader infrastructure agreement.
The budget places a heavy emphasis on market solutions, such as making it easier for states to toll interstates, saying that the federal government has become “a complicated, costly middleman.” The budget also talks about leasing vacant space in Veterans Affairs facilities and selling off major power facilities as ways of “disposing underused capital assets.”
Readers continue to write to us with questions about financing college, including how best to use “529” plans, the tax-advantaged higher-education accounts that invest in mutual funds. We asked experts to help answer this month’s questions. An excerpt from Treasurer Boozer’s interview is below…
I would like to reward employees by starting 529 accounts for their children that will vest after 10 years of the parents’ employment at our company. Is this possible?
Yes. Because a 529 is funded with after-tax money, the main advantage of a workplace payroll-deduction 529 account is convenience for the employee.
In terms of vesting, you are allowed to set any restrictions you wish on a workplace plan as long as you follow the IRS rules regarding 529 accounts, says Alabama State Treasurer Young Boozer III, who chairs the College Savings Plans Network.
“Employers may contribute a match or add additional funds, but the employee will be taxed on these amounts, which are considered income to the employee, unless the employer makes arrangements to pick up the IRS tab,” Adam says. Some states, including Nevada, give tax credits to employers who offer 529 plans and match employee contributions, she says.
Before launching your program, call the 529 plan administered by the state where your company is based to see if there are any other state incentives that could benefit your employees, Boozer says.
When paying my child’s tuition, I first paid the college myself and had our 529 plan reimburse me. Then I read that I should instead have the check sent in my child’s name, so when I made a withdrawal from another one of our 529 plans, I did that. Will this affect our taxes?
You are allowed to have the check made out in either name, so you have done nothing wrong. “Essentially, the tax consequences, if any, are applicable to the payee of the check, as they received the 1099,” Boozer says. If you used the withdrawal for qualified educational expenses—tuition, books, mandatory fees, room and board, computers and related costs—you won’t have to pay any taxes. If the money went toward something else, you’ll have to pay taxes on any gains, plus a 10% penalty (you won’t owe anything on the portion of your withdrawal that represents your contributions to the account).
“One caveat: If at any point you do end up with a taxable 529 distribution, either because you withdrew too much, or withdrew the wrong year, or withdrew funds to cover nonqualified expenses, it is usually beneficial tax-wise to have that withdrawal reported to the student, who’s probably in a lower tax bracket, rather than to the parent,” Adam says.
As I understand it, computers are only allowed as a 529 expense if the computer is listed as a requirement by the college. Is that correct?
No. As of Jan. 1, 2015, you can use 529 money to buy computers and related equipment even if the school doesn’t require it. What’s now covered: the purchase of any computer technology such as laptops, desktops and even iPads, related peripheral equipment such as printers, computer software used primarily for educational purposes, and related services such as internet access if used by the beneficiary of the 529 plan during any of the years the beneficiary is enrolled at an eligible educational institution, Adam says. Adam recommends keeping your receipts in case the IRS asks about them, and matching your 529 withdrawals to the same year you bought the computer equipment.