SECURE Act Update
On December 20, 2019, the SECURE Act was signed into law. The SECURE Act amended Section 529 to permit withdrawals to pay for expenses for apprenticeship programs registered and certified with the Secretary of Labor under the National Apprenticeship Act (Apprenticeship Program Expenses) and to pay principal and interest on certain qualified education loans (Education Loan Repayments) for a beneficiary or any of the beneficiary’s siblings. The loan repayment provisions apply to repayments up to a lifetime maximum of $10,000 per individual. The effective date of the SECURE Act is January 1, 2019.
In March 2020, Indiana Code Section 6-3-3-12 was amended (Amendment) to:
- exclude Education Loan Repayments from Indiana Qualified Higher Education Expenses; and
- revise the definition of an Indiana taxpayer to include married individuals filing separately. The maximum annual credit allowed for a married taxpayer filing separately is $500.
These changes are effective January 1, 2020. This means that, for the tax year beginning January 1, 2019, a distribution to make an Education Loan Repayment will not be subject to recapture of the Indiana state income tax credit but, beginning January 1, 2020, a distribution to make an Education Loan Repayment will be subject to recapture of the Indiana state income tax credit. In addition, any earnings distributed will be included in your Indiana adjusted gross income for the applicable tax year.
The Amendment did not address Apprenticeship Program Expenses. Distributions used to pay those expense are considered tax free distributions for both federal and Indiana tax purposes.
As with any change to law, we encourage account owners to consult a qualified tax advisor regarding the application of federal and state tax laws to their particular situation. Please see the Disclosure Booklet for detailed information.
If you have questions about the CollegeChoice Advisor 529 Savings Plan, you can reach our Customer Service team by phone at 1.866.485.9413, Monday through Friday from 8 a.m. to 8 p.m., Eastern Time.