Gov. Kim Reynolds Signs Legislation to Expand Iowa’s Tax Deduction for 529 and ABLE Savings Accounts

Iowa families looking to save for college and retirement now have more options thanks to recent updates to Iowa’s 529 plans. Governor Kim Reynolds signed Iowa HF2667 into law, expanding the tax deduction for contributions to College Savings Iowa and Iadvisor 529 Plan up to $5,500. Additionally, Iowa’s Achieving a Better Life Experience (ABLE) plan, IAble, will also benefit from the increased deduction amount.

Treasurer Roby Smith praised the legislation, stating that it provides a great way to save for the future while also receiving a tax benefit. Governor Reynolds commended Treasurer Smith’s efforts to incentivize college and retirement savings for Iowa families, making Iowa one of the nation’s most tax-friendly states.

In addition to the increased tax deduction, Iowa’s 529 account owners can now transfer up to $35,000 to a Roth IRA in the beneficiary’s name. This change aligns with federal standards and ensures that Iowans utilizing the 529 to Roth IRA transfer will not face state tax penalties.

College Savings Iowa, the state’s direct-sold 529 plan, offers a tax-free way to save for education expenses. Treasurer Smith highlighted the recent fee reduction for account holders, making it even more affordable to invest in education.

Overall, these updates to Iowa’s 529 plans aim to make saving for college and retirement more accessible for Iowa families. For more information on the programs offered by the Treasurer’s Office, visit IowaTreasurer.gov.