U.S. Sens. Richard Burr (R-NC) and Bob Casey (D-PA) recently introduced a bill that seeks to offer parents greater flexibility regarding transferring unused/excess funds from a college savings account into a Roth IRA.
The College Savings Recovery Act would provide families greater control over their savings by enabling the transfer of unused college savings account funds into a Roth IRA without penalty.
“College savings accounts play an important role in the financial planning of families across the nation,” Burr, ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, said. “We should encourage parents to save for their family’s future while recognizing that they can’t always predict what the future holds. Their child might not decide to pursue a higher education. I’m proud to work with Sen. Casey on this common sense bill, which will give families greater flexibility on their savings for years to come.”
The lawmakers noted college savings accounts enable families to place their money into tax-free accounts to later aid in costs of tuition, fees, books, and room and board but acknowledged under present law, families are penalized for withdrawing unused or leftover funds from the account should their child decide against pursuing a higher degree or complete their education without using all funds in the account.
“An early start on saving for retirement can mean the difference between peace of mind and insecurity for retired Americans,” Casey, chair of the Senate HELP Subcommittee on Children and Families, said. “This bipartisan bill will allow parents to put unused savings for their children’s education into their retirement account rather than face a penalty. I’m proud to work with Sen. Burr on legislation to encourage American families to invest in their own retirement.”