I 

109TH CONGRESS 

2D SESSION H. R. 5314 

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

education savings accounts. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 9, 2006 

Mr. SHAW (for himself, Mr. KIRK, Mr. FOLEY, Mr. COLE of Oklahoma, Mr. 

WELLER, Mrs. MILLER of Michigan, Mrs. BIGGERT, Mr. RAMSTAD, and 

Mr. DAVIS of Kentucky) 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 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 2006’’. 

6 SEC. 2. EXTENSION OF DATE FOR SUNSET OF CERTAIN 

7 EDUCATION SAVINGS INCENTIVES. 

8 In the case of the provisions of, and amendments 

9 made by, subtitle A of title IV of the Economic Growth 


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1 and Tax Relief Reconciliation Act of 2001 (relating to 

2 education savings incentives), section 901 of such Act (re3 lating to sunset of provisions of Act) shall be applied by 

4 substituting ‘‘December 31, 2015’’ for ‘‘December 31, 

5 2010’’ in subsection (a)(1) thereof. 

6 SEC. 3. DISTRIBUTIONS FROM EDUCATION SAVINGS AC7 COUNTS FOR FIRST HOME PURCHASES 

8 TREATED AS QUALIFIED DISTRIBUTIONS. 

9 (a) IN GENERAL.—Subsections (b)(1), (d)(2)(A), 

10 (d)(2)(B), (d)(2)(C)(ii)(II), and (d)(2)(D) of section 530 

11 of the Internal Revenue Code of 1986 are each amended 

12 by striking ‘‘qualified education expenses’’ and inserting 

13 ‘‘qualified expenses’’. 

14 (b) QUALIFIED EXPENSES.—Subsection (b) of sec15 tion 530 of such Code is amended— 

16 (1) by redesignating paragraphs (2) through 

17 (4) as paragraphs (3) through (5), respectively, and 

18 by inserting after paragraph (1) the following new 

19 paragraph: 

20 ‘‘(2) QUALIFIED EXPENSES.—The term ‘quali21 fied expenses’ means— 

22 ‘‘(A) qualified education expenses (as de23 fined in paragraph (3)), and 

24 ‘‘(B) qualified first-time homebuyer ex25 penses (as defined in paragraph (4)).’’, and 


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1 (2) by redesignating paragraphs (4) and (5) (as 

2 redesignated by paragraph (1)) as paragraphs (5) 

3 and (6), respectively, and by inserting after para4 graph (3) the following new paragraph: 

5 ‘‘(4) QUALIFIED FIRST-TIME HOMEBUYER EX6 PENSES.—The term ‘qualified first-time homebuyer 

7 expenses’ means, in the case of a designated bene8 ficiary who is a first-time homebuyer, the qualified 

9 acquisition costs with respect to a principal resi10 dence of such beneficiary. Terms used in this para11 graph shall have the same meaning as when used in 

12 section 72(t)(8).’’. 

13 (c) CONFORMING AMENDMENT.—The heading for 

14 paragraph (2) of section 530(d) of such Code is amended 

15 by striking ‘‘QUALIFIED EDUCATION EXPENSES’’ and in16 serting ‘‘QUALIFIED EXPENSES’’. 

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

18 this section shall apply to taxable years beginning after 

19 the date of the enactment of this Act. 

20 SEC. 4. ROLLOVERS FROM EDUCATION SAVINGS ACCOUNTS 

21 TO ROTH IRAS. 

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

23 of the Internal Revenue Code of 1986, as amended by sec24 tion 5, is amended by inserting ‘‘or a Roth IRA’’ after 

25 ‘‘another 401Kids savings account’’. 


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1 (b) CONFORMING AMENDMENT.—Subsection (e) of 

2 section 408A of such Code is amended by inserting the 

3 following after the second sentence: ‘‘Such term includes 

4 a rollover contribution to a Roth IRA from a 401Kids sav5 ings account described in section 530(d)(5).’’. 

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

7 this section shall apply to taxable years beginning after 

8 the date of the enactment of this Act. 

9 SEC. 5. RENAMING COVERDELL EDUCATION SAVINGS AC10 COUNTS AS 401KIDS SAVINGS ACCOUNTS. 

11 (a) IN GENERAL.—Section 530 of the Internal Rev12 enue Code of 1986 is amended by striking ‘‘Coverdell edu13 cation savings account’’ each place it appears and insert14 ing ‘‘401Kids savings account’’. 

15 (b) CONFORMING AMENDMENTS.— 

16 (1) The following provisions of the Internal 

17 Revenue Code of 1986 are amended by striking 

18 ‘‘Coverdell education savings’’ each place it appears 

19 and inserting ‘‘401Kids savings’’: 

20 (A) Section 26(b)(2)(E). 

21 (B) Section 72(e)(9). 

22 (C) Section 135(c)(2)(C). 

23 (D) Section 529(c)(6). 

24 (E) Subsections (a) and (e) of section 

25 4973(a). 


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1 (F) Subsections (c) and (e) of section 

2 4975. 

3 (G) Section 6693(a)(2)(E). 

4 (2) The headings for the following provisions of 

5 such Code are amended by striking ‘‘COVERDELL

6 EDUCATION SAVINGS’’ and inserting ‘‘401KIDS SAV7 INGS’’: 

8 (A) Section 72(e)(9). 

9 (B) Section 135(c)(2)(C). 

10 (C) Section 529(c)(3)(B)(vi). 

11 (D) Section 530(b)(1). 

12 (E) Section 4973(e). 

13 (F) Section 4975(c)(5). 

14 (3) The heading for section 4973(e) of such 

15 Code is amended by striking ‘‘COVERDELL EDU16 CATION SAVINGS’’ and inserting ‘‘401KIDS SAV17 INGS’’. 

18 (4) The heading for section 530 of such Code 

19 is amended to read as follows: 

20 ‘‘SEC. 530. 401KIDS SAVINGS ACCOUNTS.’’. 

21 (5) The item in the table of contents for part 

22 VII of subchapter F of chapter 1 of such Code relat23 ing to section 530 is amended to read as follows: 

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


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

2 this section shall take effect on the date of the enactment 

3 of this Act. 

Æ 


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