S. 2206: To amend the Internal Revenue Code of 1986 to increase the limitation on distributions from 529 accounts for qualified higher education expenses.

This bill proposes an amendment to the Internal Revenue Code of 1986 to increase the maximum amount that individuals can withdraw from 529 accounts for qualified higher education expenses. Currently, the limit is set at $10,000. The bill aims to double this limit to $20,000. As a 529 account is a tax-advantaged savings plan designed to encourage saving for future education costs, the increase in withdrawal limits would allow families to access more funds for eligible education-related expenses.

Key Provisions

• Increase in Withdrawal Limit: The bill increases the amount individuals can withdraw tax-free from 529 accounts from $10,000 to $20,000 for qualified higher education expenses.
• Effective Date: This change would apply to taxable years beginning after December 31, 2025.

Implications

• Families saving for college would have greater access to tax-free funds for education expenses, potentially easing the financial burden of higher education.
• Educational institutions may see a shift in enrollment patterns or financial aid applications as families may be able to afford more expensive tuition rates with the increased limits.

Impact on 529 Plan Holders

• Current owners of 529 plans would benefit as they can withdraw more money without incurring taxes, which can help cover the total costs of education, including tuition, fees, room, board, and other associated expenses.
• Future contributors to 529 plans may also feel encouraged to save more, knowing they can withdraw larger sums in the future.

Relevant Companies

• EDU (New Oriental Education & Technology Group Inc.): May see a change in enrollment as families might be more willing to invest in education with increased access to funds from 529 accounts.
• APRN (Blue Apron Holdings, Inc.): While primarily involved in meal kit delivery, may benefit from ancillary spending from college students, assuming families allocate more towards supporting education-related expenses.