The ADA has joined the Tomorrow’s Workforce Coalition in supporting the passage of the Freedom to Invest in Tomorrow’s Workforce Act, a bill that would permit the use of 529 account funds to pay for postsecondary credential and training program expenses.
The Tomorrow’s Workforce Coalition, which is led by the American Society of Association Executives and consists of 652 organizations aiming to strengthen career opportunities across the country, is urging Congress to pass the bipartisan, bicameral bill.
“The coalition respectfully urges you to approve the Freedom to Invest in Tomorrow’s Workforce Act as soon as possible so that students, families and workers can better access the credentials and skills training that help grow strong, resilient careers,” reads a letter addressed to Committee on Finance Chair Sen. Ron Wyden, D-Ore., Ranking Member Rep. Jason Smith, R-Mo., Ranking Member Sen. Mike Crapo, R-Idaho, and Ranking Member Rep. Richard Neal, D-Mass.
Under current law, state-sponsored 529 savings plans ¬– also called Qualified Tuition Programs –are exempt from federal taxes if funds are used to pay for qualified education expenses such as college degrees, programs from Title IV accredited institutions, some student loan repayments and registered apprenticeships. But 529 plan beneficiaries cannot use these funds to obtain or maintain recognized postsecondary credentials, including professional, voluntary certifications and licenses.
However, the new legislation would expand 529 plans to treat postsecondary skills training and credentialing programs as qualified higher education expenses. It would provide tax-advantaged resources for those who pursue career growth and alternative career pathways – with or without college degrees, as well as provide flexibility for beneficiaries to use their plan funds to cover whichever credentialing programs best fit their career goals.
The Freedom to Invest in Tomorrow’s Workforce Act would allow workers to use 529 funds for credential program tuition, including prep courses; testing fees, including practice exams; required books and equipment; continuing education and credential renewal; and other changes required for obtaining or maintaining a postsecondary credential.
“The bill would shift the paradigm for 529 plans – transforming them from ‘college savings plans’ to ‘career savings plans,’” the letter states. “Families could save money – utilizing the unique tax advantages that 529 plans offer – for beneficiaries at any stage of their careers and at any education level to boost job prospects and earning potential.”