II
113th CONGRESS
2d Session
S. 2882
IN THE SENATE OF THE UNITED STATES
September 18, 2014
Mr. McConnell introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to allow certain individuals a credit against income tax for contributions to 529 plans, and for other purposes.
Short title
This Act may be cited as the Enhanced 529 - Setting Aside for a Valuable Education Act
or the Enhanced 529 - S.A.V.E. Act
.
Credit for contributions to 529 plans
In general
Paragraph (1) of section 25B(d) of the Internal Revenue Code of 1986 is amended by striking and
at the end of subparagraph (B)(ii), by striking the period at the end of subparagraph (C) and
inserting , and
, and by adding at the end the following new subparagraph:
the amount of the contributions to qualified tuition programs described in paragraph (2) made by the eligible individual.
.
Contributions to qualified tuition programs
Subsection (d) of section 25B of the Internal Revenue Code of 1986 is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph:
Contributions to qualified tuition programs
In general
The term contributions to qualified tuition programs means any purchase or contribution described in paragraph (1)(A) of section 529(b) to a qualified tuition program (as defined in such section) if—
the eligible individual has the power to authorize distributions and otherwise administer the account, and
the designated beneficiary of such purchase or contribution is the eligible individual, the eligible individual’s spouse, or an individual with respect to whom the eligible individual is allowed a deduction under section 151.
Limitation based on compensation
The amount treated as a qualified savings contribution by reason of subparagraph (A) for any taxable year shall not exceed the sum of—
the compensation (as defined in section 219(f)(1)) includible in the eligible individual’s gross income for the taxable year, and
the amount excluded from the eligible individual’s gross income under section 112 (relating to combat pay) for such year.
Determination of adjusted gross income
Solely for purposes of determining the applicable percentage under subsection (b) which applies with respect to the amount treated as contributions to qualified tuition programs, adjusted gross income (determined without regard to this subparagraph) shall be increased by the excess (if any) of—
the social security benefits received during the taxable year (within the meaning of section 86), over
the amount included in gross income for such year under section 86.
.
Conforming amendments
Section 25B of the Internal Revenue Code of 1986 is amended by
striking qualified retirement savings
each place it appears and inserting qualified savings
.
The heading of subsection (d) of section 25B of such Code is amended by striking
retirement
.
Subparagraph (A) of section 25B(d)(3) of such Code, as redesignated by subsection (a), is amended—
by striking
paragraph (1)
the first place it appears and inserting
paragraph (1) or (2)
, and
by striking paragraph (1)
the second place it appears and inserting paragraph (1), or (2), as the
case may be,
.
The heading for
section 25B of such Code is amended by striking and IRA contributions
and
inserting , IRA
contributions, and qualified tuition program
contributions
.
The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 25B and inserting the following new item:
Sec. 25B. Elective deferrals, IRA
contributions, and qualified tuition program contributions by
certain
individuals.
.
Effective date
The amendments made by this section shall apply to contributions made after December 31, 2014, in taxable years ending after such date.
Exclusion from gross income for employer contributions to qualified tuition programs
In general
Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 127 the following new section:
Employer contributions to qualified tuition programs
In general
Gross income of an employee does not include amounts paid by the employer as contributions to a qualified tuition program held by the employee or spouse of the employee if the contributions are made pursuant to a program which is described in subsection (c).
Maximum exclusion
The amount excluded from the gross income of an employee under this section for the taxable year shall not exceed $600.
Qualified tuition assistance program
For purposes of this section, a qualified tuition assistance program is a separate written plan of an employer for the benefit of such employer's employees—
under which the employer makes matching contributions to qualified tuition programs of—
such employees,
their spouses, or
any individual with respect to whom such an employee or spouse—
is allowed a deduction under section 151, and
has the power to authorize distributions and otherwise administer such individual's account under the qualified tuition program, and
which meets requirements similar to the requirements of paragraphs (2), (3), (4), (5), and (6) of section 127(b).
Definitions and special rules
For purposes of this section—
Qualified tuition program
The term qualified tuition program means a qualified tuition program as defined in section 529(b).
Employee and employer
The terms employee and employer shall have the meaning given such terms by paragraphs (2) and (3), respectively, of section 127(c).
Applicable rules
Rules similar to the rules of paragraphs (4), (5), (6), and (7) of section 127(c) shall apply.
Inflation adjustment
In general
In the case of any taxable year beginning in a calendar year after 2015, the $600 amount contained in subsection (b)(1) shall be increased by an amount equal to—
such dollar amount, multiplied by
the cost-of-living
adjustment determined under section 1(f)(3) for the calendar year
in which the
taxable year begins, determined by substituting calendar year
2014
for calendar year 1992
in subparagraph (B)
thereof.
Cross reference
For reporting and recordkeeping requirements, see section 6039D.
.
Exclusion from employment taxes
Sections 3121(a)(18), 3306(b)(13), and
3401(a)(18) of such Code are each amended by inserting , 127A
after 127
each place it appears.
Section 3231(e)(6)
of such Code is amended by striking section 127
and inserting
section 127 or 127A
.
Reporting and recordkeeping requirements
Section 6039D(d)(1) of such Code is
amended by inserting , 127A
after 127
.
Other conforming amendments
Sections 125(f),
414(n)(3)(C), and 414(t)(2) of such Code are each amended by inserting
, 127A
after 127
each place it appears.
Section 132(j)(8)
of such Code is amended by striking section 127
and inserting
section 127 or 127A
.
Section 1397(a)(2)(A) of such Code is amended by inserting at the end the following new clause:
Any amount paid or incurred by an employer which is excludable from the gross income of an employee under section 127A, but only to the extent paid or incurred to a person not related to the employer.
.
Section 209(a)(15)
of the Social Security Act (42 U.S.C. 409(a)(15)) is amended by striking
or 129
and inserting , 127A, or 129
.
Clerical amendment
The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 127 the following new item:
Sec. 127A. Employer contributions
to qualified tuition programs.
.
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.