II 

113TH CONGRESS 

1ST SESSION S. 1515 

To amend the Internal Revenue Code of 1986 to improve and expand 

education savings accounts. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 18, 2013 

Mr. KIRK 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 improve 

and expand 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 ‘‘401Kids Family Sav5 ings Act of 2013’’. 

6 SEC. 2. CONVERSION OF COVERDELL EDUCATION SAVINGS 

7 ACCOUNTS TO 401KIDS SAVINGS ACCOUNTS. 

8 (a) IN GENERAL.—Section 530 of the Internal Rev9 enue Code of 1986 is amended by striking ‘‘Coverdell edu10 cation savings account’’ each place it appears in subVerDate Mar 15 2010 23:11 Sep 18, 2013 Jkt 029200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1515.IS S1515

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1 section (a), subsection (b)(1), subsection (b)(4), sub2 section (d)(4)(A), subsection (d)(5), subsection (d)(6), 

3 subsection (d)(9), and subsection (h), and inserting 

4 ‘‘401Kids savings account’’. 

5 (b) CONFORMING AMENDMENTS.— 

6 (1) The heading of section 530 of the Internal 

7 Revenue Code of 1986 is amended by striking 

8 ‘‘COVERDELL EDUCATION SAVINGS ACCOUNTS’’ 

9 and inserting ‘‘401KIDS SAVINGS ACCOUNTS’’. 

10 (2) The heading of paragraph (1) of section 

11 530(b) of such Code is amended by striking 

12 ‘‘COVERDELL EDUCATION SAVINGS ACCOUNT’’ and 

13 inserting ‘‘401KIDS SAVINGS ACCOUNT’’. 

14 (3) Section 26(b)(2)(E) of such Code is amend15 ed by striking ‘‘Coverdell education savings ac16 counts’’ and inserting ‘‘401Kids savings accounts’’. 

17 (4) Section 72(e)(9) of such Code is amended 

18 by striking ‘‘Coverdell education savings account’’ 

19 and inserting ‘‘401Kids savings account’’. 

20 (5) The heading of paragraph (9) of section 

21 72(e) of such Code is amended by striking ‘‘COVER22 DELL EDUCATION SAVINGS ACCOUNTS’’ and insert23 ing ‘‘401KIDS SAVINGS ACCOUNTS’’. 


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1 (6) Section 135(c)(2)(C) of such Code is 

2 amended by striking ‘‘Coverdell education savings 

3 account’’ and inserting ‘‘401Kids savings account’’. 

4 (7) The heading of subparagraph (C) of section 

5 135(c)(2) of such Code is amended by striking 

6 ‘‘COVERDELL EDUCATION SAVINGS ACCOUNTS’’ and 

7 inserting ‘‘401KIDS SAVINGS ACCOUNTS’’. 

8 (8) Section 408A(e)(2)(A)(ii) of such Code is 

9 amended by striking ‘‘Coverdell education savings 

10 account’’ and inserting ‘‘401Kids savings account’’. 

11 (9) The heading of clause (vi) of section 

12 529(c)(3)(B) of such Code is amended by striking 

13 ‘‘COVERDELL EDUCATION SAVINGS ACCOUNTS’’ and 

14 inserting ‘‘401KIDS SAVINGS ACCOUNTS’’. 

15 (10) Section 529(c)(6) of such Code is amended 

16 by striking ‘‘Coverdell education savings account’’ 

17 and inserting ‘‘401Kids savings account’’. 

18 (11) Section 877A(e)(2) of such Code is amend19 ed by striking ‘‘Coverdell education savings account’’ 

20 and inserting ‘‘401Kids savings account’’. 

21 (12) Section 4973(a)(4) of such Code is amend22 ed by striking ‘‘Coverdell education savings account’’ 

23 and inserting ‘‘401Kids savings account’’. 


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1 (13) Section 4973(e)(1) of such Code is amend2 ed by striking ‘‘Coverdell education savings ac3 counts’’ and inserting ‘‘401Kids savings accounts’’. 

4 (14) Section 4973(e)(2)(A) of such Code is 

5 amended by striking ‘‘Coverdell education savings 

6 account’’ and inserting ‘‘401Kids savings account’’. 

7 (15) The heading of subsection (e) of section 

8 4973 of such Code is amended by striking ‘‘COVER9 DELL EDUCATION SAVINGS ACCOUNTS’’ and insert10 ing ‘‘401KIDS SAVINGS ACCOUNTS’’. 

11 (16) Section 4975(c)(5) of such Code is amend12 ed by striking ‘‘Coverdell education savings account’’ 

13 and inserting ‘‘401Kids savings account’’. 

14 (17) The heading of paragraph (5) of section 

15 4975(c) of such Code is amended by striking 

16 ‘‘COVERDELL EDUCATION SAVINGS ACCOUNTS’’ and 

17 inserting ‘‘401KIDS SAVINGS ACCOUNTS’’. 

18 (18) Section 4975(e)(1)(F) of such Code is 

19 amended by striking ‘‘Coverdell education savings 

20 account’’ and inserting ‘‘401Kids savings account’’. 

21 (19) Section 6693(a)(2)(E) of such Code is 

22 amended by striking ‘‘Coverdell education savings 

23 accounts’’ and inserting ‘‘401Kids savings ac24 counts’’. 


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1 (20) The heading of part VIII of subchapter F 

2 of chapter 1 of such Code is amended by striking 

3 ‘‘HIGHER EDUCATION SAVINGS’’ and inserting 

4 ‘‘EDUCATION AND CHILDREN’S SAVINGS’’. 

5 (c) CLERICAL AMENDMENTS.— 

6 (1) The item relating to part VIII in the table 

7 of parts for subchapter F of chapter 1 of the Inter8 nal Revenue Code of 1986 is amended to read as fol9 lows: 

‘‘PART VIII. EDUCATION AND CHILDREN’S SAVINGS ENTITIES’’. 

10 (2) The table of sections for part VIII of sub11 chapter F of chapter 1 of such Code is amended by 

12 striking the item relating to section 530 and insert13 ing the following new item: 

‘‘Sec. 530. 401Kids savings accounts.’’. 

14 (d) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 the date of the enactment of this Act. 

17 SEC. 3. QUALIFIED DISTRIBUTIONS FOR FIRST HOME PUR18 CHASES. 

19 (a) IN GENERAL.—Paragraph (1) of section 530(b) 

20 of the Internal Revenue Code of 1986 is amended by strik21 ing ‘‘qualified education expenses’’ and inserting ‘‘quali22 fied expenses’’. 

23 (b) QUALIFIED EXPENSES.—Subsection (b) of sec24 tion 530 of the Internal Revenue Code of 1986 is amended 


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1 by redesignating paragraphs (2), (3), and (4) as para2 graphs (4), (5), and (6), respectively, and by inserting 

3 after paragraph (1) the following new paragraphs: 

4 ‘‘(2) QUALIFIED EXPENSES.—The term ‘quali5 fied expenses’ means— 

6 ‘‘(A) qualified first-time homebuyer ex7 penses, and 

8 ‘‘(B) qualified education expenses. 

9 ‘‘(3) QUALIFIED FIRST-TIME HOMEBUYER EX10 PENSES.— 

11 ‘‘(A) IN GENERAL.—The term ‘qualified 

12 first-time homebuyer expenses’ means, in the 

13 case of a designated beneficiary who is a first14 time homebuyer, the qualified acquisition costs 

15 with respect to a principal residence of such 

16 beneficiary. 

17 ‘‘(B) DEFINITIONS.—The terms ‘first-time 

18 homebuyer’, ‘qualified acquisition costs’, and 

19 ‘principal residence’ have the same meaning as 

20 when used in section 72(t)(8).’’. 

21 (c) CONFORMING AMENDMENTS.— 

22 (1) Paragraph (4)(A)(ii) (as redesignated by 

23 subsection (b)) of section 530(b) of the Internal 

24 Revenue Code of 1986 is amended by striking ‘‘as 


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1 defined in paragraph (3)’’ and inserting ‘‘as defined 

2 in paragraph (5)’’. 

3 (2) Subparagraphs (A), (B), and (D) of section 

4 530(d)(1) of such Code are each amended by strik5 ing ‘‘qualified education expenses’’ each place it ap6 pears and inserting ‘‘qualified expenses’’. 

7 (3) The heading of paragraph (2) of section 

8 530(d) of such Code is amended by striking ‘‘EDU9 CATION EXPENSES’’ and inserting ‘‘EXPENSES’’. 

10 (4) The heading of paragraph (4) of section 

11 530(d) of such Code is amended by striking ‘‘EDU12 CATIONAL EXPENSES’’ and inserting ‘‘EXPENSES’’. 

13 (5) Subclause (I) of section 529(c)(3)(B)(vi) of 

14 such Code is amended by striking ‘‘to which clauses 

15 (i) and (ii) and section 530(d)(2)(A) apply’’ and in16 serting ‘‘for qualified higher education expenses to 

17 which clauses (i) and (ii) apply and for qualified 

18 education expenses to which section 530(d)(2)(A) 

19 applies’’. 

20 (6) Clause (vi) of section 529(c)(3)(B) of such 

21 Code is amended by striking ‘‘and section 

22 530(d)(2)(A).’’ and inserting ‘‘and the amount of 

23 the exclusion with respect to qualified education ex24 penses under section 530(d)(2)(A).’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to distributions made in taxable 

3 years beginning after the date of the enactment of this 

4 Act. 

5 SEC. 4. QUALIFIED ROLLOVER CONTRIBUTIONS FROM 

6 401KIDS SAVINGS ACCOUNTS TO ROTH IRAS. 

7 (a) IN GENERAL.—Paragraph (5) of section 530(d) 

8 of the Internal Revenue Code of 1986 is amended by in9 serting ‘‘, or into a Roth IRA of the beneficiary’’ after 

10 ‘‘as of such date’’. 

11 (b) CONFORMING AMENDMENT; TECHNICAL COR12 RECTION.—Paragraph (1) of section 408A(e) of the Inter13 nal Revenue Code of 1986 is amended to read as follows: 

14 ‘‘(1) IN GENERAL.—The term ‘qualified rollover 

15 contribution’ means a rollover contribution to a Roth 

16 IRA from another such account, from an eligible re17 tirement plan (as defined in section 402(c)(8)(B)), 

18 or from a 401Kids savings account (as defined in 

19 section 530(b)(1)), but only if— 

20 ‘‘(A) such rollover contribution meets the 

21 requirements of section 408(d)(3), 

22 ‘‘(B) in the case of a rollover contribution 

23 from an eligible retirement plan described in 

24 clause (iii), (iv), (v), or (vi) of section 

25 402(c)(8)(B), such contribution meets the reVerDate Mar 15 2010 23:11 Sep 18, 2013 Jkt 029200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1515.IS S1515

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1 quirements of section 402(c), 403(b)(8), or 

2 457(e)(16), whichever is applicable, and 

3 ‘‘(C) in the case of a rollover contribution 

4 from a 401Kids savings account, such contribu5 tion meets the requirements of section 

6 530(d)(5). 

7 For purposes of section 408(d)(3)(B), there shall be 

8 disregarded any qualified rollover contribution from 

9 an individual retirement plan (other than a Roth 

10 IRA) to a Roth IRA.’’. 

11 (c) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to rollover contributions made in 

13 taxable years beginning after the date of the enactment 

14 of this Act. 

Æ 


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