The Section 529 college savings plan industry's two leading advocacy organizations are teaming up to advance their legislative and regulatory agendas in Washington.
Information-sharing between the College Savings Plan Network and the College Savings Foundation marks a first step toward working together, said Roger Michaud, senior vice president and divisional sales manager for Franklin Templeton Distributors Inc., a unit of Franklin Templeton Investments of San Mateo, Calif., and treasurer of the Washington-based CSF.
"We're going to discuss who we're seeing [in Washington], what we're talking about and what was discussed," he said.
In the future, representatives from both groups may meet jointly with legislators and regulators, Mr. Michaud said.
But no final decision has been reached about whether to schedule such meetings, he said.
Board members of the two groups began working together during a conference call Feb. 6 and are scheduled to meet again this month, according to Mr. Michaud, who is based in Short Hills, N.J.
Members of the Lexington, Ky.-based CSPN are mostly state officials who oversee 529 programs, while the CSF draws most of its support from financial services companies that manage 529 plans and provide them with investment products.
"We have to communicate more effectively to coordinate our efforts to speak with one voice in Washington," Dan Ebersole, chairman of the CSPN's executive board, said at the CSF's annual conference in Miami Beach, Fla., in January. He is also the Atlanta-based director of Georgia's Office of Treasury and Fiscal Services.
"The legislative agendas of the two organizations are very consistent with one another," said Jacqueline "Jackie" Williams, executive director of the Ohio Tuition Trust Authority in Columbus and the immediate past head of the CSPN. "Clearly, it is in our best interest to find ways to support our mutual agenda."
In fact, the industry did achieve one long-standing legislative objective in the stimulus bill signed into law last month by President Obama.
Purchases of computer equipment and related technology, including Internet access, were deemed eligible as expenses for 529 plans in the massive American Recovery and Reinvestment Act of 2009.
However, the eligibility is limited to 2009 and 2010, and both the CSF and the CSPN plan to lobby lawmakers to make computer-related expenses permanently eligible to be paid for by 529 savings plans.
Both organizations also want contributions to such plans to be included by Congress in the saver's credit provision of the tax code, which encourages low-income families to save for their retirement.
Currently, taxpayers with an adjusted gross income under $50,000 receive an income tax credit for employee contributions to an employer-sponsored retirement plan or an individual retirement account. The CSPN and the CSF want that credit to be extended to college savings contributions.
"It's a dollar-for-dollar credit that would be very beneficial to families in that income group," Mr. Michaud said.
The CSPN and the CSF also want investors in 529 plans to be able to change the allocations in their accounts two or four times a year. Until recently, investors were allowed to make changes only once a year, but this year, the Internal Revenue Service is allowing investors two re-allocations.
NEW ADMINISTRATION
The industry is optimistic that it may achieve some of its goals in the new administration's first education bill, Mr. Michaud said.
"Education is a priority for President Obama, and this may be a better opportunity for us than in the past," Mr. Michaud said.
But veteran Washington insider James Delaplane warned that the 529 industry will face a period of challenge in Washington this year.
As a result of the economic crisis, lawmakers will be looking for ways to raise revenue and won't be eager to grant further tax breaks, said Mr. Delaplane, an industry consultant and attorney for Davis & Harman LLP in Washington.
The industry's prospects for achieving success with computer expenses and reallocations in 529 accounts are good, said James "Jamie" Canup, a Richmond, Va.-based attorney and tax specialist who has advised 529 plans and program mangers for more than a decade.
But extending the saver's credit to 529 plans will be difficult in the current political environment, he said.
This week, Mr. Canup is launching a law firm in Richmond, 529 Counsel PLC.
He has been a tax partner with Troutman Sanders LLP of Atlanta for the past four years.
E-mail Charles Paikert at cpaikert@investmentnews.com.
