114TH CONGRESS 

1ST SESSION H. R. 529 

AN ACT 

To amend the Internal Revenue Code of 1986 to improve 

529 plans. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. FINDINGS AND PURPOSE. 

2 (a) FINDINGS.—Congress finds the following: 

3 (1) When the Economic Growth and Tax Relief 

4 Reconciliation Act of 2001 became law, the tax 

5 treatment of section 529 college savings plans was 

6 changed so that qualified distributions were no 

7 longer taxed as income. The favorable tax treatment 

8 of college savings plans was made permanent with 

9 the passage of the Pension Protection Act of 2006. 

10 (2) Section 529 college savings plans empower 

11 middle-class families to accumulate savings to offset 

12 the rising costs of attending college. 

13 (3) The latest data from the College Savings 

14 Plan Network shows that there are 11.83 million 

15 529 accounts open throughout all 50 states, which 

16 represent $244.5 billion in total assets. The average 

17 529 account size is $20,671. 

18 (4) States that sponsor 529 college savings 

19 plans have taken steps to ensure these plans are a 

20 tool that all families can use to save for college, in21 cluding setting minimum contributions as low as $25 

22 per month to encourage participation by families of 

23 all income levels. 

24 (5) The President’s fiscal year 2016 Budget 

25 proposes raising taxes by taxing certain future dis26 tributions made from 529 college savings plans. 
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1 (6) The tax proposed by the President would 

2 discourage the use of 529 college savings plans, re3 quiring families and students to take on more debt. 

4 (7) Purchase of a computer represents a signifi5 cant higher education expense and therefore should 

6 be eligible for qualified distributions under 529 col7 lege savings plans. 

8 (b) PURPOSE.—It is the purpose of this Act to— 

9 (1) enact policies that strengthen 529 college 

10 savings plans; and 

11 (2) make 529 plans more modern, consumer12 friendly, and responsive to the realities faced by stu13 dents today. 

14 SEC. 2. COMPUTER TECHNOLOGY AND EQUIPMENT PERMA15 NENTLY ALLOWED AS A QUALIFIED HIGHER 

16 EDUCATION EXPENSE FOR SECTION 529 AC17 COUNTS. 

18 (a) IN GENERAL.—Section 529(e)(3)(A)(iii) of the 

19 Internal Revenue Code of 1986 is amended to read as fol20 lows: 

21 ‘‘(iii) expenses for the purchase of 

22 computer or peripheral equipment (as de23 fined in section 168(i)(2)(B)), computer 

24 software (as defined in section 

25 197(e)(3)(B)), or Internet access and re-
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1 lated services, if such equipment, software, 

2 or services are to be used primarily by the 

3 beneficiary during any of the years the 

4 beneficiary is enrolled at an eligible edu5 cational institution.’’. 

6 (b) EFFECTIVE DATE.—The amendment made by 

7 this section shall apply to taxable years beginning after 

8 December 31, 2014. 

9 SEC. 3. ELIMINATION OF DISTRIBUTION AGGREGATION RE10 QUIREMENTS. 

11 (a) IN GENERAL.—Section 529(c)(3) of the Internal 

12 Revenue Code of 1986 is amended by striking subpara13 graph (D). 

14 (b) EFFECTIVE DATE.—The amendment made by 

15 this section shall apply to distributions after December 31, 

16 2014. 

17 SEC. 4. RECONTRIBUTION OF REFUNDED AMOUNTS. 

18 (a) IN GENERAL.—Section 529(c)(3) of the Internal 

19 Revenue Code of 1986, as amended by section 3, is 

20 amended by adding at the end the following new subpara21 graph: 

22 ‘‘(D) SPECIAL RULE FOR CONTRIBUTIONS

23 OF REFUNDED AMOUNTS.—In the case of a 

24 beneficiary who receives a refund of any quali25 fied higher education expenses from an eligible 
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1 educational institution, subparagraph (A) shall 

2 not apply to that portion of any distribution for 

3 the taxable year which is recontributed to a 

4 qualified tuition program of which such indi5 vidual is a beneficiary, but only to the extent 

6 such recontribution is made not later than 60 

7 days after the date of such refund and does not 

8 exceed the refunded amount.’’. 

9 (b) EFFECTIVE DATE.— 

10 (1) IN GENERAL.—The amendment made by 

11 this section shall apply with respect to refunds of 

12 qualified higher education expenses after December 

13 31, 2014. 

14 (2) TRANSITION RULE.—In the case of a refund 

15 of qualified higher education expenses received after 

16 December 31, 2014, and before the date of the en17 actment of this Act, section 529(c)(3)(D) of the In18 ternal Revenue Code of 1986 (as added by this sec19 tion) shall be applied by substituting ‘‘not later than 

20 60 days after the date of the enactment of this sub-
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1 paragraph’’ for ‘‘not later than 60 days after the 

2 date of such refund’’. 

Passed the House of Representatives February 25, 

2015. 

Attest: 

Clerk. 

114TH CONGRESS 

1ST SESSION H. R. 529 

AN ACT 

To amend the Internal Revenue Code of 1986 to 

improve 529 plans.