I 

112TH CONGRESS 

1ST SESSION H. R. 529 

To amend the Internal Revenue Code of 1986 to treat computer technology 

and equipment as eligible higher education expenses for 529 plans, to 

allow certain individuals a credit against income tax for contributions 

to 529 plans, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 8, 2011 

Ms. JENKINS (for herself, Mr. KIND, Mr. WESTMORELAND, Mr. FILNER, Mr. 

SARBANES, Mr. CHAFFETZ, Mr. YARMUTH, Ms. LEE of California, and 

Mr. LEWIS of Georgia) 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 treat computer technology and equipment as eligible higher education expenses for 529 plans, to allow certain individuals 

a credit against income tax for contributions to 529 

plans, and for other purposes. 

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 ‘‘Savings Enhancement 

5 for Education in College Act’’. 


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1 SEC. 2. COMPUTER TECHNOLOGY AND EQUIPMENT AL2 LOWED AS A QUALIFIED HIGHER EDUCATION 

3 EXPENSE FOR SECTION 529 ACCOUNTS. 

4 (a) IN GENERAL.—Section 529(e)(3)(A) of the Inter5 nal Revenue Code of 1986 is amended by striking ‘‘and’’ 

6 at the end of clause (i), by striking the period at the end 

7 of clause (ii), and by adding at the end the following: 

8 ‘‘(iii) expenses paid or incurred for 

9 the purchase of any computer technology 

10 or equipment (as defined in section 

11 170(e)(6)(F)(i)) or Internet access and re12 lated services, if such technology, equip13 ment, or services are to be used primarily 

14 by the designated beneficiary while enrolled 

15 at an eligible educational institution. 

16 Clause (iii) shall not include expenses for com17 puter software designed for sports, games, or 

18 hobbies unless the software is predominantly 

19 educational in nature.’’. 

20 (b) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to expenses paid or incurred after 

22 December 31, 2010, in taxable years ending after such 

23 date. 

24 SEC. 3. CREDIT FOR CONTRIBUTIONS TO 529 PLANS. 

25 (a) IN GENERAL.—Subsection (d) of section 25B of 

26 the Internal Revenue Code of 1986 (relating to elective 


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1 deferrals and IRA contributions by certain individuals) is 

2 amended by redesignating paragraph (2) as paragraph (3) 

3 and by inserting after paragraph (1) the following new 

4 paragraph: 

5 ‘‘(2) CONTRIBUTIONS TO QUALIFIED TUITION

6 PROGRAMS.— 

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

8 savings contribution’ includes the amount of 

9 any purchase or contribution described in para10 graph (1)(A) of section 529(b) to a qualified 

11 tuition program (as defined in such section) 

12 if— 

13 ‘‘(i) the taxpayer has the power to au14 thorize distributions and otherwise admin15 ister the account, and 

16 ‘‘(ii) the designated beneficiary of 

17 such purchase or contribution is the tax18 payer, the taxpayer’s spouse, or an indi19 vidual with respect to whom the taxpayer 

20 is allowed a deduction under section 151. 

21 ‘‘(B) LIMITATION BASED ON COMPENSA22 TION.—The amount treated as a qualified sav23 ings contribution by reason of subparagraph 

24 (A) for any taxable year shall not exceed the 

25 sum of— 


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1 ‘‘(i) the compensation (as defined in 

2 section 219(f)(1)) includible in the tax3 payer’s gross income for the taxable year, 

4 and 

5 ‘‘(ii) the amount excluded from the 

6 taxpayer’s gross income under section 112 

7 (relating to combat pay) for such year. 

8 ‘‘(C) DETERMINATION OF ADJUSTED

9 GROSS INCOME.—Solely for purposes of deter10 mining the applicable percentage under sub11 section (b) which applies with respect to the 

12 amount treated as a qualified savings contribu13 tion by reason of subparagraph (A), adjusted 

14 gross income (determined without regard to this 

15 subparagraph) shall be increased by the excess 

16 (if any) of— 

17 ‘‘(i) the social security benefits re18 ceived during the taxable year (within the 

19 meaning of section 86), over 

20 ‘‘(ii) the amount included in gross in21 come for such year under section 86.’’. 

22 (b) CONFORMING AMENDMENTS.— 

23 (1) Section 25B of such Code is amended by 

24 striking ‘‘qualified retirement savings’’ each place it 


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1 appears in the text and inserting ‘‘qualified sav2 ings’’. 

3 (2) The subsection heading for section 25B(d) 

4 of such Code is amended by striking ‘‘RETIRE5 MENT’’. 

6 (3) Subparagraph (A) of section 25B(d)(3) of 

7 such Code, as redesignated by subsection (a), is 

8 amended— 

9 (A) by striking ‘‘paragraph (1)’’ the first 

10 place it appears and inserting ‘‘paragraph (1) 

11 or (2)’’, and 

12 (B) by striking ‘‘paragraph (1)’’ the sec13 ond place it appears and inserting ‘‘paragraph 

14 (1), or (2), as the case may be,’’. 

15 (4) The heading for section 25B of such Code 

16 is amended by striking ‘‘AND IRA CONTRIBU17 TIONS’’ and inserting ‘‘, IRA CONTRIBUTIONS, 

18 AND QUALIFIED TUITION PROGRAM CONTRIBU19 TIONS’’. 

20 (5) The table of sections for subpart A of part 

21 IV of subchapter A of chapter 1 of such Code is 

22 amended by striking the item relating to section 25B 

23 and inserting the following new item: 

‘‘Sec. 25B. Elective deferrals, IRA contributions, and qualified tuition program 

contributions by certain individuals.’’. 


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

2 this section shall apply to contributions made after De3 cember 31, 2010, in taxable years ending after such date. 

4 SEC. 4. INVESTMENT DIRECTION UNDER QUALIFIED TUI5 TION PROGRAMS. 

6 (a) IN GENERAL.—Paragraph (4) of section 529(b) 

7 of the Internal Revenue Code of 1986 (relating to invest8 ment direction) is amended by striking the period at the 

9 end and inserting ‘‘more frequently than 4 times per cal10 endar year.’’. 

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

12 this section shall apply to years beginning after December 

13 31, 2010. 

14 SEC. 5. EXCLUSION FROM GROSS INCOME FOR EMPLOYER 

15 CONTRIBUTIONS TO QUALIFIED TUITION 

16 PROGRAMS. 

17 (a) IN GENERAL.—Part III of subchapter B of chap18 ter 1 of the Internal Revenue Code of 1986 (relating to 

19 items specifically excluded from gross income) is amended 

20 by inserting after section 127 the following new section: 

21 ‘‘SEC. 127A. EMPLOYER CONTRIBUTIONS TO QUALIFIED 

22 TUITION PROGRAMS. 

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

24 does not include amounts paid by the employer as con25 tributions to a qualified tuition program held by the emVerDate Mar 15 2010 23:21 Feb 09, 2011 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H529.IH H529

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1 ployee or spouse of the employee if the contributions are 

2 made pursuant to a program which is described in sub3 section (b). 

4 ‘‘(b) MAXIMUM EXCLUSION.—The amount excluded 

5 from the gross income of an employee under this section 

6 for the taxable year shall not exceed $600. 

7 ‘‘(c) QUALIFIED TUITION ASSISTANCE PROGRAM.— 

8 For purposes of this section, a qualified tuition assistance 

9 program is a separate written plan of an employer for the 

10 benefit of such employer’s employees— 

11 ‘‘(1) under which the employer makes matching 

12 contributions to qualified tuition programs of— 

13 ‘‘(A) such employees, 

14 ‘‘(B) their spouses, or 

15 ‘‘(C) any individual with respect to whom 

16 such an employee or spouse— 

17 ‘‘(i) is allowed a deduction under sec18 tion 151, and 

19 ‘‘(ii) has the power to authorize dis20 tributions and otherwise administer such 

21 individual’s account under the qualified 

22 tuition program, and 

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

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

25 (6) of section 127(b). 


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1 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur2 poses of this section— 

3 ‘‘(1) QUALIFIED TUITION PROGRAM.—The term 

4 ‘qualified tuition program’ means a qualified tuition 

5 program as defined in section 529(b). 

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

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

8 given such terms by paragraphs (2) and (3), respec9 tively, of section 127(c). 

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

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

12 127(c) shall apply. 

13 ‘‘(e) INFLATION ADJUSTMENT.— 

14 ‘‘(1) IN GENERAL.—In the case of any taxable 

15 year beginning in a calendar year after 2011, the 

16 $600 amount contained in subsection (b)(1) shall be 

17 increased by an amount equal to— 

18 ‘‘(A) such dollar amount, multiplied by 

19 ‘‘(B) the cost-of-living adjustment deter20 mined under section 1(f)(3) for the calendar 

21 year in which the taxable year begins, deter22 mined by substituting ‘calendar year 2010’ for 

23 ‘calendar year 1992’ in subparagraph (B) 

24 thereof. 


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1 Any increase determined under the preceding sen2 tence shall be rounded to the nearest multiple of 

3 $50. 

4 ‘‘(f) CROSS REFERENCE.—For reporting and record5 keeping requirements, see section 6039D.’’. 

6 (b) EXCLUSION FROM EMPLOYMENT TAXES.— 

7 (1) Sections 3121(a)(18), 3306(b)(13), and 

8 3401(a)(18) of such Code are each amended by in9 serting ‘‘127A,’’ after ‘‘127,’’ each place it appears. 

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

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

12 or 127A’’. 

13 (c) REPORTING AND RECORDKEEPING REQUIRE14 MENTS.—Section 6039D(d)(1) of such Code is amended 

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

16 (d) OTHER CONFORMING AMENDMENTS.— 

17 (1) Sections 125(f), 414(n)(3)(C), and 

18 414(t)(2) of such Code are each amended by insert19 ing ‘‘127A,’’ after ‘‘127,’’ each place it appears. 

20 (2) Section 132(j)(8) of such Code is amended 

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

22 or 127A’’. 

23 (3) Section 1397(a)(2)(A) of such Code is 

24 amended by inserting at the end the following new 

25 clause: 


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

2 an employer which is excludable from the 

3 gross income of an employee under section 

4 127A, but only to the extent paid or in5 curred to a person not related to the em6 ployer.’’. 

7 (4) Section 209(a)(15) of the Social Security 

8 Act (42 U.S.C. 409(a)(15)) is amended by striking 

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

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

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

12 is amended by inserting after the item relating to section 

13 127 the following new item: 

‘‘Sec. 127A. Employer contributions to qualified tuition programs.’’. 

14 (f) 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. 

Æ 


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