I 

114TH CONGRESS 

2D SESSION H. R. 5186 

To amend the Internal Revenue Code of 1986 to exclude employer contributions to 529 plans from gross income and employment taxes and to 

allow a deduction for individual contributions to such plans. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 10, 2016 

Mr. POLIQUIN 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 

employer contributions to 529 plans from gross income 

and employment taxes and to allow a deduction for individual contributions to such plans. 

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 ‘‘Help All Americans 

5 Save for College Act of 2016’’. 


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1 SEC. 2. TAX TREATMENT OF CONTRIBUTIONS TO 529 

2 PLANS. 

3 (a) EXCLUSION FROM GROSS INCOME FOR EM4 PLOYER CONTRIBUTIONS.— 

5 (1) IN GENERAL.—Part III of subchapter B of 

6 chapter 1 of the Internal Revenue Code of 1986 is 

7 amended by inserting after section 139E the fol8 lowing new section: 

9 ‘‘SEC. 139F. EMPLOYER CONTRIBUTIONS TO 529 PLAN OR 

10 ABLE ACCOUNT. 

11 ‘‘(a) IN GENERAL.—In the case of an individual who 

12 is a qualified account owner, gross income shall not in13 clude the amount of any contribution to such account dur14 ing the taxable year by the employer of the account owner. 

15 ‘‘(b) LIMITATION.—The amount exempt from gross 

16 income by subsection (a) for a taxable year shall not ex17 ceed the lesser of— 

18 ‘‘(1) an amount equal to the compensation in19 cludible in the individual’s gross income for such 

20 taxable year, or 

21 ‘‘(2) $5,000 ($10,000 in the case of a joint re22 turn) for each dependent who of the taxpayer is the 

23 designated beneficiary of an account under section 

24 529. 

25 ‘‘(c) QUALIFIED ACCOUNT OWNER.—For purposes of 

26 this section, the term ‘qualified account owner’ means— 


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1 ‘‘(1) in the case of an account in connection 

2 with a qualified tuition program, the account owner 

3 of an account of a designated beneficiary under sec4 tion 529, and 

5 ‘‘(2) in the case of an ABLE account, the des6 ignated beneficiary in connection with the ABLE ac7 count under section 529A(e)(3).’’. 

8 (2) CAFETERIA PLAN DOES NOT INCLUDE EM9 PLOYER CONTRIBUTIONS TO 529 PLANS OR ABLE AC10 COUNTS.—Section 125(d)(2) of such Code is amend11 ed by adding at the end the following: 

12 ‘‘(E) EXCEPTION FOR CONTRIBUTIONS TO

13 529 PLAN AND ABLE ACCOUNTS.—Subpara14 graph (A) shall not apply to a plan to the ex15 tent of amounts which a covered employee may 

16 elect to have the employer pay as contributions 

17 to an account under section 529 or 529A.’’. 

18 (3) CLERICAL AMENDMENT.—The table of sec19 tions for part III of subchapter B of chapter 1 of 

20 such Code is amended by inserting after the item re21 lating to section 139E the following new item: 

‘‘Sec. 139F. Employer contributions to 529 plan or ABLE account.’’. 

22 (b) FEDERAL INSURANCE CONTRIBUTIONS.— 

23 (1) WAGES.—Section 3121(a) of such Code is 

24 amended by striking ‘‘or’’ at the end of paragraph 

25 (22), by striking the period at the end of paragraph 


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1 (23) and inserting ‘‘; or’’, and by inserting after 

2 paragraph (23) the following: 

3 ‘‘(24) the amount of any contribution made to 

4 or on behalf of an employee if at the time of such 

5 contribution it is reasonable to believe that the em6 ployee will be able to exclude such contribution from 

7 income under section 139F.’’. 

8 (2) NET EARNINGS FROM SELF-EMPLOY9 MENT.—Section 1402(a) of such Code is amended 

10 by striking ‘‘and’’ at the end of paragraph (16), by 

11 striking the period at the end of paragraph (17) and 

12 inserting ‘‘; and’’, and inserting after paragraph 

13 (17) the following: 

14 ‘‘(18) there shall be excluded any contribution 

15 made to or on behalf of an employee that is not in16 cludible in gross income of the employee under sec17 tion 139F.’’. 

18 (3) CONFORMING AMENDMENTS TO SOCIAL SE19 CURITY ACT.— 

20 (A) WAGES.—Section 209(a) of the Social 

21 Security Act (42 U.S.C. 409(a)) is amended by 

22 striking ‘‘or’’ at the end of paragraph (19) and 

23 inserting a semicolon, by striking the period at 

24 the end of paragraph (20) and inserting ‘‘; or’’, 


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1 and by inserting after paragraph (20) the fol2 lowing: 

3 ‘‘(21) The amount of any contribution made to 

4 or on behalf of an employee that is not includible in 

5 gross income of the employee under section 139F of 

6 the Internal Revenue Code of 1986.’’. 

7 (B) NET EARNINGS FROM SELF-EMPLOY8 MENT.—Section 211(a) of the Social Security 

9 Act (42 U.S.C. 411(a)) is amended by striking 

10 ‘‘and’’ at the end of paragraph (15), by striking 

11 the period at the end of paragraph (16) and in12 serting ‘‘; and’’, and inserting after paragraph 

13 (16) the following: 

14 ‘‘(17) There shall be excluded any contribution 

15 made to or on behalf of an employee that is not in16 cludible in gross income of the employee under sec17 tion 139F of the Internal Revenue Code of 1986.’’. 

18 (c) RAILROAD RETIREMENT.—Section 3231(e) of 

19 such Code is amended by adding at the end the following: 

20 ‘‘(13) EMPLOYER CONTRIBUTIONS TO 529 PLAN

21 OR ABLE ACCOUNT.—The term compensation shall 

22 not include any contribution made to or on behalf of 

23 an employee that is not includible in gross income of 

24 the employee under section 139F.’’. 

25 (d) DEDUCTION FOR INDIVIDUAL CONTRIBUTIONS.— 


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1 (1) IN GENERAL.—Part VII of subchapter B of 

2 chapter 1 of the Internal Revenue Code of 1986 is 

3 amended by redesignating section 224 as section 

4 225 and by inserting after section 223 the following 

5 new section: 

6 ‘‘SEC. 224. CONTRIBUTIONS TO 529 PLANS AND ABLE AC7 COUNTS. 

8 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an 

9 individual, there shall be allowed as a deduction for the 

10 taxable year an amount equal to the sum of— 

11 ‘‘(1) the aggregate contributions made by such 

12 individual to qualified tuition programs (as defined 

13 in section 529) during such taxable year, and 

14 ‘‘(2) the aggregate contributions made by such 

15 individual to ABLE accounts (as defined in section 

16 529A) during such taxable year. 

17 ‘‘(b) LIMITATION.—The amount allowed as a deduc18 tion by subsection (a) for a taxable year shall not exceed 

19 $5,000.’’. 

20 (2) CLERICAL AMENDMENT.—The table of sec21 tions for part VII of subchapter B of chapter 1 of 

22 such Code is amended by redesignating the item re23 lating to section 224 as an item relating to section 

24 225 and by inserting after the item relating to sec25 tion 223 the following new item: 

‘‘Sec. 224. Contributions to 529 plans and ABLE accounts.’’. 


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

2 this section shall apply to contributions made during tax3 able years beginning after the date of the enactment of 

4 this Act. 

5 SEC. 3. ADDITIONAL TAX FOR DISTRIBUTIONS NOT USED 

6 FOR QUALIFIED PURPOSES. 

7 (a) QUALIFIED TUITION PROGRAMS.— 

8 (1) IN GENERAL.—The first sentence of section 

9 529(c)(6) of the Internal Revenue Code of 1986 is 

10 amended by striking the period at the end and in11 serting ‘‘, except that the rate of such tax shall be 

12 determined under subparagraph (B) of this para13 graph.’’. 

14 (2) RATE.—Paragraph (6) of section 529(c) of 

15 such Code, as amended by subsection (a), is amend16 ed— 

17 (A) by striking ‘‘The tax’’ and inserting 

18 ‘‘(A) IN GENERAL.—The tax’’, and 

19 (B) by adding at the end the following: 

20 ‘‘(B) RATE.—For purposes of subpara21 graph (A), the tax rate determined under this 

22 subparagraph is the greater of— 

23 ‘‘(i) 10 percent, and 

24 ‘‘(ii) the highest rate of income tax 

25 applicable to such person under this title.’’. 


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1 (b) QUALIFIED ABLE PROGRAMS.— 

2 (1) IN GENERAL.—Subparagraph (A) of section 

3 529A(c)(3) of the Internal Revenue Code of 1986 is 

4 amended by striking ‘‘10 percent’’ and inserting 

5 ‘‘the applicable percentage’’. 

6 (2) APPLICABLE PERCENTAGE.—Paragraph (3) 

7 of section 529A(c) of such Code is amended by add8 ing at the end the following: 

9 ‘‘(D) APPLICABLE PERCENTAGE.—For 

10 purposes of this paragraph, the term ‘applicable 

11 percentage’ means the greater of— 

12 ‘‘(i) 10 percent, and 

13 ‘‘(ii) the highest rate of income tax 

14 applicable to such person under this title.’’. 

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

16 this section shall apply to distributions made during tax17 able years beginning after the date of the enactment of 

18 this Act. 

Æ 


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