Bill
HR 3574
Allows 529 distributions to cover reasonable transportation (including parking) to attend eligible schools, capped by the institution’s COA transportation allowance.
Purpose and intent
- HR 3574 seeks to broaden the use of qualified distributions from Section 529 plans to include reasonable transportation expenses (including parking) to attend an eligible educational institution.
- The bill ties the allowed transportation expenses to the student’s cost of attendance (COA) transportation allowance as defined by the Higher Education Act, ensuring distributions do not exceed the institution’s COA transportation figure.
Key provisions
- Amends Internal Revenue Code Section 529(e)(3)(A):
- Adds a new clause (iv): allows distributions for “reasonable expenses for transportation (including parking) to such eligible educational institution, not in excess of the allowance (applicable to the student) for transportation included in the cost of attendance … as determined by such eligible educational institution.”
- Amends Section 529(c)(8):
- Increases the scope to explicitly include “reasonable expenses for transportation (including parking) in connection with such participation” within qualified distributions, aligning transportation costs with other qualified expenses.
- Effective date:
- These amendments apply to distributions made after the date of enactment of the bill.
Who is affected
- 529 plan account owners and beneficiaries: able to use tax-advantaged distributions for transportation and parking costs related to attending an eligible educational institution, subject to COA limits.
- Eligible educational institutions: determine the student’s COA transportation allowance used to cap qualifying distributions.
- Taxpayers and financial aid landscape: potential changes in how qualified education costs are treated for federal tax purposes and possibly impact financial aid packaging that uses COA figures.
Procedural and timeline aspects
- Introduced in the House on May 23, 2025.
- Status: Referred to the House Committee on Ways and Means; no further action details provided in the available record.
- Sponsors: Jennifer L. McClellan (primary); Linda T. Sánchez (cosponsor).
Notes for readers
- The bill preserves the general tax-advantaged status of 529 distributions by tying transportation costs to the institution’s COA transportation allowance, preventing excess amounts beyond what the COA permits.
- No fiscal impact or cost estimates are provided in the available text; committee action and potential amendments could influence scope and administration.
Compiled from official sources — confirm details with the bill’s official record.
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