Plain English Breakdown
The source text contains conflicting dates (2030 vs. 2031) in one section, but the context of 'before January 1' suggests the period ends on December 31, 2030; however, the explicit date listed is 2031.
AB-2444: Tax Rules for Scholarshare and Roth IRA Transfers
This bill updates state income tax rules to match federal laws allowing certain college savings account transfers to retirement accounts without taxes, and creates a temporary deduction for contributions to the state's college savings program.
What This Bill Does
- Matches federal law by excluding from gross income distributions made after December 31, 2023, that are transferred directly from a qualified tuition program to a Roth IRA.
- Applies this exclusion rule for taxable years beginning on or after January 1, 2026, and before January 1, 2031.
- Allows a deduction in determining adjusted gross income for contributions made by a qualified taxpayer to a Scholarshare account.
- Sets the contribution deduction period for taxable years beginning on or after January 1, 2027, and before January 1, 2032.
- Includes required information about goals, performance indicators, and data collection because it authorizes a new tax expenditure.
Who It Names or Affects
- Taxpayers who hold accounts in qualified tuition programs like the Scholarshare trust
- People planning to transfer funds directly from college savings plans into Roth IRAs during the specified years
- Qualified taxpayers contributing money to Scholarshare accounts between 2027 and 2031
Terms To Know
- Scholarshare trust
- The Golden State Scholarshare College Savings Trust, a state program that helps students save for postsecondary education costs.
- Roth IRA
- A type of retirement account mentioned in federal law where certain transfers from college savings plans may be excluded from income tax.
- Taxable year
- The 12-month period used to calculate how much income a person earned for tax purposes, which determines when these new rules apply.
Limits and Unknowns
- The official text does not define the specific dollar limits or eligibility criteria that determine who counts as a 'qualified taxpayer'.
- The transfer exclusion applies only to taxable years before January 1, 2031.
- The contribution deduction applies only to taxable years beginning on or after January 1, 2027.