Personal Income Tax Law: deferred compensation: exclusions: long-term qualified tuition program.

Senator Niello's legislation aligns California tax law with federal provisions allowing tax-exempt transfers from qualified college savings plans to Roth IRAs, modifying how the state treats distributions from programs like the Golden State Scholarshare Trust. The measure creates a five-year window, from 2025 through 2029, during which account holders can make direct trustee-to-trustee transfers without including those amounts in their taxable income.

The bill establishes specific performance metrics to evaluate this tax treatment, including tracking both the number of taxpayers utilizing these transfers and the average transfer amounts. These indicators allow the Legislature to assess whether the provision achieves its stated goal of providing tax relief while simplifying return preparation for California residents making such transfers.

Implementation requires coordination between qualified tuition program administrators and the Franchise Tax Board, as the legislation mandates synchronized reporting of distributions between state and federal tax authorities. While the measure takes effect immediately upon enactment through a tax levy provision, its core transfer provisions apply only to distributions made during the designated five-year period.