This bill allows first-time homebuyers to withdraw money from 529 college savings plans without the normal tax penalties if the account has been open for at least 15 years. Specifically, beneficiaries can withdraw up to $35,000 (reduced by any other qualified withdrawals) from older contributions and earnings to purchase their first home, provided they use the funds within 60 days of withdrawal. The bill affects first-time homebuyers who have had 529 education savings accounts for at least 15 years and want to use accumulated funds for down payments or home purchases. If the home purchase is delayed or cancelled, withdrawals can be recontributed to a 529 plan or ABLE account within 120 days without penalty. However, if a beneficiary sells the home or stops living in it within five years of purchase, they must repay the tax benefit that was deferred, though the repayment obligation decreases by 20 percent for each full year the home was retained. The legislation takes effect for distributions made after the bill's enactment date.
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