I 

108TH CONGRESS 

1ST SESSION H. R. 3318

To amend the Internal Revenue Code of 1986 to exclude from gross income 

employer contributions to college tuition plans and education savings accounts. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 16, 2003

Mr. PORTER (for himself, Mr. GERLACH, Mr. COLE, Mr. CARTER, Mr. WILSON of South Carolina, Mr. PAUL, Mr. BARRETT of South Carolina, Mr. 

NUNES, Mr. ROGERS of Michigan, Mr. PLATTS, Mr. BURNS, Mr. KING

of Iowa, Mr. GARRETT of New Jersey, and Mrs. MUSGRAVE) introduced 

the following bill; which was referred to the Committee on Ways and 

Means 

A BILL

To amend the Internal Revenue Code of 1986 to exclude 

from gross income employer contributions to college tuition plans and education savings accounts.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Education Savings Act 

5 of 2003’’. 
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1 SEC. 2. EXCLUSION FROM GROSS INCOME FOR CONTRIBU2 TIONS TO EDUCATION SAVINGS ENTITIES. 

3 (a) IN GENERAL.—Part III of subchapter B of chap4 ter 1 of the Internal Revenue Code of 1986 (relating to 

5 items specifically excluded from gross income) is amended 

6 by inserting after section 127 the following new section: 

7 ‘‘SEC. 127A. CONTRIBUTIONS TO EDUCATION SAVINGS EN8 TITIES. 

9 ‘‘(a) IN GENERAL.—Gross income of an employee 

10 does not include amounts paid by the employer as con11 tributions to an education savings entity held by the em12 ployee or spouse of the employee if the contributions are 

13 made pursuant to a program which is described in sub14 section (b). 

15 ‘‘(b) EDUCATIONAL ASSISTANCE PROGRAM.—For 

16 purposes of this section, an educational assistance pro17 gram is a separate written plan of an employer for the 

18 benefit of such employer’s employees—

19 ‘‘(1) under which the employer makes contribu20 tions to education savings entities of such employees 

21 or spouses of employees, and 

22 ‘‘(2) which meets requirements similar to the 

23 requirements of paragraphs (2), (3), (4), (5), and 

24 (6) of section 127(b). 

25 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur26 poses of this section—
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1 ‘‘(1) EDUCATION SAVINGS ENTITY.—The term 

2 ‘education savings entity’ means—

3 ‘‘(A) a qualified tuition program (as de4 fined in section 529(b)), and 

5 ‘‘(B) a Coverdell education savings account 

6 (as defined in section 530(b)). 

7 ‘‘(2) EMPLOYEE AND EMPLOYER.—The terms 

8 ‘employee’ and ‘employer’ shall have the meaning 

9 given such terms by paragraphs (2) and (3), respec10 tively, of section 127(c). 

11 ‘‘(3) APPLICABLE RULES.—Rules similar to the 

12 rules of paragraphs (4), (5), (6), and (7) of section 

13 127(c) shall apply. 

14 ‘‘(d) CROSS REFERENCE.—For reporting and record15 keeping requirements, see section 6039D.’’. 

16 (b) EXCLUSION FROM EMPLOYMENT TAXES.—

17 (1) Section 3121(a)(18) of such Code is amend18 ed by striking ‘‘or 129’’ and inserting ‘‘, 127A, or 

19 129’’. 

20 (2) Section 3231(e)(6) of such Code is amended 

21 by striking ‘‘section 127’’ and inserting ‘‘section 127 

22 or 127A’’. 

23 (3) Section 3306(b)(13) of such Code is amend24 ed by striking ‘‘or 129’’ and inserting ‘‘, 127A, or 

25 129’’. 
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1 (4) Section 3401(a)(18) of such Code is amend2 ed by striking ‘‘or 129’’ and inserting ‘‘, 127A, or 

3 129’’. 

4 (c) REPORTING AND RECORDKEEPING REQUIRE5 MENTS.—Section 6039D(d)(1) of such Code is amended 

6 by inserting ‘‘127A,’’ after ‘‘127,’’. 

7 (d) OTHER CONFORMING AMENDMENTS.—

8 (1) Section 51A(b)(5)(B) of such Code is 

9 amended by striking ‘‘or’’ at the end of clause (iii), 

10 by redesignating clause (iv) as clause (v), and by in11 serting after clause (iii) the following new clause: 

12 ‘‘(iv) section 127A (relating to con13 tributions to education savings entities), 

14 but only to the extent paid or incurred to 

15 a person not related to the employer, or’’. 

16 (2) Section 125(f) of such Code is amended by 

17 inserting ‘‘127A,’’ after ‘‘127,’’. 

18 (3) Section 132(j)(8) of such Code is amended 

19 by striking ‘‘section 127’’ and inserting ‘‘section 127 

20 or 127A’’. 

21 (4) Section 414(n)(3)(C) of such Code is 

22 amended by inserting ‘‘127A,’’ after ‘‘127,’’. 

23 (5) Section 414(t)(2) of such Code is amended 

24 by inserting ‘‘127A,’’ after ‘‘127,’’. 
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1 (6) Section 1397(a)(2)(A) of such Code is 

2 amended by inserting at the end the following new 

3 clause: 

4 ‘‘(iii) Any amount paid or incurred by 

5 an employer which is excludable from the 

6 gross income of an employee under section 

7 127A, but only to the extent paid or in8 curred to a person not related to the em9 ployer.’’. 

10 (7) Section 209(15) of the Social Security Act 

11 (42 U.S.C. 409(15)) is amended by striking ‘‘or 

12 129’’ and inserting ‘‘, 127A, or 129’’. 

13 (e) CLERICAL AMENDMENT.—The table of sections 

14 for part III of subchapter B of chapter 1 of such Code 

15 is amended by inserting after the item relating to section 

16 127 the following new item:

‘‘Sec. 127A. Contributions to education savings entities.’’.

17 (f) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to remuneration paid after Decem19 ber 31, 2003.

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