An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in personal income tax, further providing for classes of income.
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed House
- Passed Senate
- To Governor
- Became Law
Overview
This bill amends Pennsylvania’s tax code to clarify that distributions from Pennsylvania’s 529 college savings plans are exempt from state income tax when rolled over into a Roth IRA. Specifically, it ensures that rollovers from these programs to Roth IRAs are treated as excludable from taxation under both Pennsylvania and federal law. The change clarifies existing rules regarding qualified tuition programs and Roth IRA rollovers.
Key provisions
- Clarifies that distributions from PA-529 accounts are exempt from state income tax.
- Specifies that rollovers from PA-529 accounts to Roth IRAs are also exempt.
- Refers to section 529 of the Internal Revenue Code of 1986, as amended.
- Addresses qualified tuition programs within the context of 529 plans.
- Details the exemption under section 529(c)(3)(E) of the Internal Revenue Code.
- Updates Section 303(a.7)(2)(i)(B) of the Tax Reform Code of 1971.
Who is affected
- Pennsylvania residents
- Individuals with Pennsylvania-based 529 savings plans
- Individuals contributing to Roth IRAs
- Financial institutions administering 529 plans
- The Department of Revenue
Notable changes
- Expands the existing exemption for 529 plan distributions to include rollovers to Roth IRAs.
- Provides greater clarity on the tax treatment of 529 plan assets when transferred to Roth IRAs.
Bill text
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Document of record
- Version
- Pn 3717 Html
- Published
- Not published in the source record
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Sponsors
Official sponsors from legislative records.
9 on record
Primary sponsor
Cosponsors
Benjamin Sanchez
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