Freedom to Invest in Tomorrow’s Workforce Act
The Freedom to Invest in Tomorrow’s Workforce Act would expand the use of 529 education savings accounts by allowing distributions to cover certain postsecondary credentialing expenses. Specifically, it adds “qualified postsecondary credentialing expenses” to the list of eligible expenses that can be paid tax-free from a 529 plan. The bill defines these credentialing expenses to include not only traditional items like tuition and books, but also testing fees required to obtain or maintain a credential and continuing education fees necessary to keep a credential current. It also broadens what counts as a “recognized postsecondary credential program” and a “recognized postsecondary credential,” using criteria such as state workforce lists, VA directories, industry-recognized exams, and various government-recognized credentials. The changes apply to distributions made after enactment. In short, the bill aims to make it easier for individuals to use 529 funds to pursue and maintain industry credentials, apprenticeships, licenses, and other recognized postsecondary credentials that are valued in the workforce, not just traditional degrees.
Key Points
- 1Adds new category: qualified postsecondary credentialing expenses, to be treated as qualified higher education expenses for 529 accounts.
- 2Eligible credentialing expenses include: (a) standard costs for enrollment/attendance (tuition, fees, books, supplies, equipment) if they would be covered for an eligible educational institution, (b) testing fees required to obtain or maintain a credential, and (c) continuing education fees required to maintain a credential.
- 3Defines a recognized postsecondary credential program through multiple pathways, including state lists under the Workforce Innovation and Opportunity Act, VA’s WEAMS directory, examinations recognized by credible organizations, and a Secretary-designated list after consult with the Secretary of Labor.
- 4Defines recognized postsecondary credentials to include: industry-recognized credentials (including those accredited by recognized bodies and listed in COOL or similar directories), apprenticeships registered with the Secretary of Labor, occupational licenses, and credentials defined in the Workforce Innovation and Opportunity Act.
- 5Effective date: applies to distributions after the enactment of the bill.