McHenry Introduces the EPIC Act
Legislation enables parents to save for education expenses tax-free
Chief Deputy Whip Patrick McHenry (NC-10) introduced H.R. 675, the Empowering Parents to Invest in Choice (EPIC) Act. Introduced during National School Choice Week, this legislation enables parents to save for their children's education in tax-free savings accounts including the popular 529 savings accounts. Additionally, this legislation would increase the contribution limits to Coverdell accounts.
“Ensuring a good educational foundation for your children is among each parent’s greatest concerns in life,” said Congressman McHenry. “Yet today, rising costs have made it increasingly difficult for parents to achieve this goal.
“With introduction of the EPIC Act, I hope to change that,” McHenry continued. “By allowing parents to save tax-free via 529 accounts, this legislation provides children the opportunity to attend the school of their choice, while also increasing access to important educational resources like books, tutors, or special needs services. A strong education is vital for children’s success in life, and this bill gives parents an important tool to invest in their development.”
BACKGROUND ON H.R. 675:
H.R. 675 allows parents to use 529 saving accounts for certain K-12 expenses, including: academic tutoring, special needs services, tuition, and fees for schools and books. It also increases the limit on contributions to Coverdell accounts from $2,000 to $12,000.
529 plans are tax-advantaged investment trusts currently used to pay for higher-education expenses. Withdrawals from these savings plans are tax-free if they are used to pay for qualified higher education expenses. Payments to 529 accounts must be made in cash or check using after-tax dollars.
A Coverdell account is a tax-advantaged investment account that can be used to pay for higher-education expenses as well as elementary and secondary school expenses. Currently, these accounts are capped at $2,000 per year.