WASHINGTON, D.C. - Third District Congressman Jon Porter today introduced legislation in the House of Representatives that will make it easier for parents to take advantage of college savings plans, and for employers to assist in their efforts.  The “Education Savings Act of 2005” improves current tax law to encourage more workers to accept employer donations to certain education savings accounts.

“As millions of parents across the country face the skyrocketing costs associated with higher education, we are constantly looking for ways to help ease the financial burden,” said Porter.  “As a member of the House Education and the Workforce Committee, I’m proud to introduce the ‘Education Savings Act of 2005,’ which will improve current tax law in order to provide parents with more options when saving for college.”

The “Education Savings Act of 2005” addresses donations to 529 College Savings Plans and 530 Coverdell Education Savings Accounts.  Currently, if an employer chooses to donate to either plan, that donation is counted as part of the employee’s gross income.  This creates a financial disincentive for the employee, and ends up preventing businesses, small and large, from utilizing an important tool that benefits America’s workers.  Porter’s legislation would change the existing law by making these donations tax-free, encouraging both employees and employers to participate in these helpful savings plans.

“These two savings plans are well-intentioned and have proven helpful to parents in the past, but simply aren’t an option for most because of the increase in taxes they would face.  Let’s make these plans useful for everybody by making employer donations tax-free,” Porter stated.

The bill has been referred to the Ways and Means Committee, where it will await action.

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