Obama Drops Plan to Tax 529 College Savings Accounts

President Barack is dropping his controversial plan to tax college savings accounts known as 529 plans, a senior administration official told NBC News Tuesday. Earnings on investments in 529 plans are tax-exempt, and parents don't pay any taxes as money is taken out to pay for college, but the White House had proposed taxing the plans because surveys showed 70 percent of those using the plans make more than $200,000 a year. The official said the taxation plan had become a "distraction" amid the administration's efforts to cut education taxes for middle class families.

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