529 Plans are getting much needed attention from Congress. The SECURE Act 2.0 introduced the ability to roll excess or unused 529 assets into Roth IRAs for beneficiaries of said 529 assets. This has, and will, become a major savings tool for young adults who are entering the workforce and can’t defer the maximum to their employer sponsored retirement plans.
Recently, I went to Capitol Hill along with members from the CFP Board and Financial Planning Association as well as other CFP® professionals to advocate for further expansion of eligible use for 529s with the “Freedom to Invest in Tomorrow’s Workforce Act.” This bill would extend eligible use of these investment vehicles to costs associated with training, certification and other credentials to prospective individuals. Some benefits would include certification program tuition costs, testing fee (including practice exams), costs associated with required books and equipment, continuing education and certification renewal fees, as well as costs for fees involved with obtaining and maintaining a certification.
This would be extremely valuable for those who do not plan, or are unable, to attend a four-year college or university. According to the National Skills Coalition, the American workforce is comprised mostly of middle-skill jobs that require more than a high school education but not a bachelor’s degree. Certifications prove that a professional has met industry standards, enhancing their experience and background, which does much to show employers and clients that they are knowledgeable and complete candidates.
Imagine a scenario where you are looking for a mechanic to fix a problem with your car. Would you be more willing to trust one who is certified or one who isn’t? Odds are, you would inherently trust the one with a certificate because it proves to you that they possess the necessary skills and expertise required for the job, even if the mechanic without the certificate is just as skilled. And that is precisely why this bill would make a huge impact on our workforce and economy.
As a CERTIFIED FINANCIAL PLANNER® professional, I am required to comply with regulations and best practices. I am also required to renew my certification every two years after taking thirty hours of continuing education and two hours of ethics courses. This ensures that I stay updated on industry trends and evolving technologies. This bill could open a new world where your plumber or contractor are held to similar standards, which again, could raise the level of trust in these relationships.
The conversations we had with the staffers of Senators and Representatives about the bill were all positive. The bill has been introduced to Congress and has notable support on both sides of the aisle, but it has yet to advanced to either house for a vote. I’ll provide any updates on this initiative, so stay tuned! While a lot of work remains, this marks a great start in expanding the eligible use of 529 assets.