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WASHINGTON — President Obama, facing angry reprisals from parents and from lawmakers of both parties, will drop his proposal to effectively end popular college savings accounts known as 529s, but will keep an expanded tuition tax credit at the center of his college access plan, the White House said Tuesday. The decision came just hours after House Speaker John A. Boehner of Ohio demanded the proposal be withdrawn from the president’s budget, due out Monday, “for the sake of middle-class families.” But the call for the White House to relent also came from top Democrats, including Representatives Nancy Pelosi of...

White House Press Secretary Josh Earnest said Friday that middle-class families concerned about President Obama's plan to raise taxes on their college savings should just send their children to community college. Obama's plan raises taxes on families saving for college by eliminating the tax-free status of money withdrawn from a 529 savings accounts. "I was very surprised by the Obama 529 proposal because in many ways it is anti-middle class for families trying to afford college," SavingforCollege.com founder Joe Hurley told The New York Times. Asked to "square" Obama's State of the Union claim that he wanted to make college...

LOS ANGELES, Jan 22 (Reuters) - President Barack Obama's proposal this week to roll back tax benefits for so-called 529 plans exposes a fundamental disagreement about who is benefiting from these state-sponsored college savings plans. 529 plans are sponsored by states and run by investment management companies. Withdrawals from the accounts can be used tax-free to pay for qualified education expenses at any college or university in the country, such as tuition, fees and books. Supporters of Obama's proposal point to a 2012 government report showing the plans being used by less than 3 percent of all U.S. families and...

President Obama is proposing a radical change to the 529 college savings plans held by millions of families, which would require those who use them to rethink their approach to college savings. As part of his plan to simplify the tax code and help the middle class, one of the 529 plan’s most attractive benefits would be eliminated: Money could no longer be withdrawn tax-free. (The new rules would apply only to new contributions.) The accounts, many of which are run by the states, allow people to make contributions that grow tax-free. The money can be withdrawn without the paying...

The First Family’s 529 Windfall The large contributions the Obamas have already made won’t be taxed. If there’s any silver lining in the President’s plan to end the major tax benefit of saving for college, it’s that at least he’s not talking about taxing money that’s already been saved. This aspect of the Obama plan is particularly valuable to people like, well, Barack Obama. As we noted on Thursday, the President wants to allow the Internal Revenue Service to begin taxing distributions from so-called 529 plans, even if they are used as intended to fund legitimate educational expenses such as...

President Obama is pitching his new tax plan as a way to help the middle class at the expense of the rich. But middle-class savers are bound to notice if he achieves two of the White House’s stated goals—to “roll back” tax benefits of 529 college savings plans and “repeal tax incentives going forward” for Coverdell Education Savings Accounts. Both plans allow parents, grandparents or anyone looking to help fund a kid’s education to contribute after-tax dollars into accounts that grow tax-free. There is also no tax when the money is withdrawn, provided it is used for qualified educational expenses...