Governor Signs HB 342, Passed with Unanimous Support by The New Mexico Legislature, Bringing New Mexico into Alignment with Federal Qualified Education Expenses for 529 Plans
For Immediate Release
Contact: Joanie Griffin
ALBUQUERQUE, NM – March 27, 2023 – The New Mexico Legislature unanimously passed House Bill 342—Education Savings Plan Uses—the legislation was signed by Governor Michelle Lujan Grisham on March 16, 2023, and will go into effect on June 16, 2023. With the bill signed into law, New Mexicans utilizing a 529 education savings account authorized by the New Mexico Education Trust Board—such as The Education Plan®—can now elect to receive a tax deduction for contributions used to pay for additional federal qualified education expenses, including:
- Up to $10,000 per year to cover expenses for tuition in K-12
- Up to $10,000 in student loan repayments
- Apprenticeship expenses
- Rollovers to Able accounts and Roth IRAs
Other existing allowed qualified expenses include tuition and fees, books, supplies, room and board, computers, and special needs educational services at universities, community colleges, trade schools, or vocational schools across the United States.
“We appreciate the Legislature and Governor, as well as community leadership and parents who advocated for this important change in New Mexico law,” said Natalie Cordova, Executive Director of Education Trust Board of New Mexico, the state agency that administers The Education Plan, 529 education savings plan. “The legislation, sponsored by Representative T. Ryan Lane, Minority Floor Leader and Senator Peter Wirth, Majority Floor Leader, brings New Mexico into alignment with Section 529 of the Internal Revenue Code and adds additional incentive for New Mexicans to save for future education expenses. With expanded uses in alignment with the federal code, New Mexico families now have more options for future education expenses.”
“HB 342 represents much needed education empowerment for working families in New Mexico,” said Representative T. Ryan Lane, Minority Floor Leader, and co-sponsor of the legislation. “Not only can our families continue to use their 529 education savings accounts for higher education planning, now we have unleashed opportunity for so many families to utilize this fund for both private K-12 education as well as for apprenticeships post-high school. Aligning our state law governing 529 plans with updated federal law, we now have secured a path forward for so many working families to use the power of their savings accounts to create education opportunity for their children and grandchildren.”
“We are delighted that action was taken by our state legislature to align New Mexico’s 529 plans with federal law,” said Carla Kugler, President and CEO of Associated Builders and Contractors of New Mexico. “Families in New Mexico need every tool in the toolbox to provide educational opportunities for their students. Opening up the usage of these funds to pay for additional expenses like apprenticeship expenses will create pathways not previously possible.”
In addition to versatile uses of saved funds, account earnings grow tax-free, and withdrawals are tax-free if used for qualified education expenses. For New Mexico residents, there is an income tax deduction on the full amount of any contributions to an account authorized by the State, such as The Education Plan, when funds are used to pay for qualified expenses, which now includes additional federal qualified expenses.
“With expanded use at the state-level, now is a great time for New Mexicans to invest in their own education or the education of a loved one,” added Cordova.
For more information or to open an account, visit TheEducationPlan.com.
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