Enhanced 529 - S.A.V.E. Act

Summary: Enhanced 529 - Setting Aside for a Valuable Education Act or the Enhanced 529 - S.A.V.E. Act - Amends the Internal Revenue Code to: (1) allow a tax credit for contributions to a qualified tuition program (529 tuition program); and (2) allow an exclusion, up to $600, from the gross income of an employee for employer contributions to a 529 tuition program.

SECTION 1. 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''.

SEC. 2. CREDIT FOR CONTRIBUTIONS TO 529 PLANS.

    (a) 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:
                    ``(D) the amount of the contributions to qualified 
                tuition programs described in paragraph (2) made by the 
                eligible individual.''.
    (b) 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:
            ``(2) Contributions to qualified tuition programs.--
                    ``(A) 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--
                            ``(i) the eligible individual has the power 
                        to authorize distributions and otherwise 
                        administer the account, and
                            ``(ii) 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.
                    ``(B) 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--
                            ``(i) the compensation (as defined in 
                        section 219(f)(1)) includible in the eligible 
                        individual's gross income for the taxable year, 
                        and
                            ``(ii) the amount excluded from the 
                        eligible individual's gross income under 
                        section 112 (relating to combat pay) for such 
                        year.
                    ``(C) 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--
                            ``(i) the social security benefits received 
                        during the taxable year (within the meaning of 
                        section 86), over
                            ``(ii) the amount included in gross income 
                        for such year under section 86.''.
    (c) Conforming Amendments.--
            (1) Section 25B of the Internal Revenue Code of 1986 is 
        amended by striking ``qualified retirement savings'' each place 
        it appears and inserting ``qualified savings''.
            (2) The heading of subsection (d) of section 25B of such 
        Code is amended by striking ``Retirement''.
            (3) Subparagraph (A) of section 25B(d)(3) of such Code, as 
        redesignated by subsection (a), is amended--
                    (A) by striking ``paragraph (1)'' the first place 
                it appears and inserting ``paragraph (1) or (2)'', and
                    (B) by striking ``paragraph (1)'' the second place 
                it appears and inserting ``paragraph (1), or (2), as 
                the case may be,''.
            (4) The heading for section 25B of such Code is amended by 
        striking ``and ira contributions'' and inserting ``, ira 
        contributions, and qualified tuition program contributions''.
            (5) 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.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions made after December 31, 2014, in taxable years 
ending after such date.

SEC. 3. EXCLUSION FROM GROSS INCOME FOR EMPLOYER CONTRIBUTIONS TO 
              QUALIFIED TUITION PROGRAMS.

    (a) 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:

``SEC. 127A. EMPLOYER CONTRIBUTIONS TO QUALIFIED TUITION PROGRAMS.

    ``(a) 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).
    ``(b) Maximum Exclusion.--The amount excluded from the gross income 
of an employee under this section for the taxable year shall not exceed 
$600.
    ``(c) 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--
            ``(1) under which the employer makes matching contributions 
        to qualified tuition programs of--
                    ``(A) such employees,
                    ``(B) their spouses, or
                    ``(C) any individual with respect to whom such an 
                employee or spouse--
                            ``(i) is allowed a deduction under section 
                        151, and
                            ``(ii) has the power to authorize 
                        distributions and otherwise administer such 
                        individual's account under the qualified 
                        tuition program, and
            ``(2) which meets requirements similar to the requirements 
        of paragraphs (2), (3), (4), (5), and (6) of section 127(b).
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualified tuition program.--The term `qualified 
        tuition program' means a qualified tuition program as defined 
        in section 529(b).
            ``(2) 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).
            ``(3) Applicable rules.--Rules similar to the rules of 
        paragraphs (4), (5), (6), and (7) of section 127(c) shall 
        apply.
    ``(e) Inflation Adjustment.--
            ``(1) 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--
                    ``(A) such dollar amount, multiplied by
                    ``(B) 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.
        Any increase determined under the preceding sentence shall be 
        rounded to the nearest multiple of $50.
    ``(f) Cross Reference.--For reporting and recordkeeping 
requirements, see section 6039D.''.
    (b) Exclusion From Employment Taxes.--
            (1) 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.
            (2) Section 3231(e)(6) of such Code is amended by striking 
        ``section 127'' and inserting ``section 127 or 127A''.
    (c) Reporting and Recordkeeping Requirements.--Section 6039D(d)(1) 
of such Code is amended by inserting ``, 127A'' after ``127''.
    (d) Other Conforming Amendments.--
            (1) 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.
            (2) Section 132(j)(8) of such Code is amended by striking 
        ``section 127'' and inserting ``section 127 or 127A''.
            (3) Section 1397(a)(2)(A) of such Code is amended by 
        inserting at the end the following new clause:
                            ``(iii) 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.''.
            (4) 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''.
    (e) 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.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.