There’s good news this school year for families looking to provide the best possible opportunities for their children. Thanks to tax reform and America’s booming economy, parents can save more money for their children’s education, and students are finding better job options than we’ve seen in decades.
Youth unemployment just hit a 52-year low, which means more young Americans are finding their first jobs and other opportunities to build skills that are preparing them for life. Thanks to the Republican tax law, this year also marks the first time that parents can start a 529 savings account for their children’s K-12 education. Before January 2018, tax-free 529 accounts were only available to save for college.
Each of my three children — Cole, who has Down syndrome, Grace, and Brynn — have very different needs. Like other families, my husband and I want to have choices about the kinds of schools they attend and how we supplement their education at home. We also recognize that the economy is changing rapidly, and our education system should be flexible enough to adapt to diverse situations.
The new expansion of 529 saving accounts for K-12 education, the biggest step Congress has ever taken to give parents more school choice in 20 years, encourages parents like us to save for educational options in the future. I couldn’t have predicted my son Cole’s needs when he was born with Down syndrome, and many parents are similarly surprised by a child with a learning disability or unique educational aptitude that the public school in their ZIP code just isn’t able to accommodate. By allowing family members to save more money for education, we are putting decisions back in the hands of parents who know best what kind of education their children need.
So, how do these accounts work? Parents, grandparents, aunts, uncles, and others may open a 529 tax-advantaged savings account for a child as soon as he or she is born. Every state has a different 529 state plan manager with a different mix of available investments.
The earnings in that account may accumulate tax-free as long as the money is used for qualified education purposes. Additionally, many states also provide a state tax deduction on contributions to the account. The savings may be used to pay up to $10,000 per year in tuition, fees or books at elementary or secondary schools.
The economy this year is also allowing people to start dreaming again. Because of tax reform, business owners are starting new expansion projects, investing more in their employees, and contributing to their communities. As a result, workers are finding more job opportunities — in fact, there are 6.7 million open jobs right now. This summer marked the lowest midsummer joblessness rate for youth between the ages of 16-24 since July 1966.
For young people, that first job is an important part of their education. My first job at McDonald’s was where I learned lifelong skills like customer service, how to work with a team and the value of a dollar. It helped me build the confidence I needed to apply for my next job as well.
There is also good news to help people with disabilities start and keep a job. According to a recent study, 70 percent of Americans with disabilities are looking for a job, but only about one-third find it. The Tax Cuts and Jobs Act makes giant strides to knock down barriers that are trapping people with disabilities in poverty. Two of my bills, ABLE to Work and ABLE Financial Planning were signed into law in tax reform to expand on the ABLE Act of 2014 that created tax-free savings accounts for job training, education and disability-related expenses. Now beneficiaries with ABLE accounts can save even more of their earnings and rollover unused 529 education savings dollars into their ABLE accounts.
Expanded 529 savings accounts, ABLE accounts and historically low levels of youth unemployment are just a few of many reasons to celebrate going back to school. Because Republicans made sure these pro-family provisions were a key part of tax reform, our children have more choices and opportunities to thrive in a booming economy that allows them to achieve their dreams and reach their full potential. As a result, we are all are better off now.
• Cathy McMorris Rodgers is House Republican Conference Chair.
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