II

105TH CONGRESS

1ST SESSION S. 1133

To amend the Internal Revenue Code of 1986 to allow tax-free expenditures

from education individual retirement accounts for elementary and secondary school expenses and to increase the maximum annual amount of

contributions to such accounts.

IN THE SENATE OF THE UNITED STATES

JULY 31, 1997

Mr. COVERDELL (for himself, Mr. LOTT, Mr. NICKLES, Mr. MACK, Mr.

CRAIG, Mr. MCCONNELL, Mr. ROTH, Mr. GRAMM, Mr. ABRAHAM, Mr.

ASHCROFT, Mr. ALLARD, Mr. BENNETT, Mr. BOND, Mr. BROWNBACK,

Mr. COATS, Mr. DOMENICI, Mr. DEWINE, Mr. FAIRCLOTH, Mr. GORTON,

Mr. GRAMS, Mr. GREGG, Mr. HAGEL, Mr. HATCH, Mr. HELMS, Mr.

HUTCHINSON, Mrs. HUTCHISON, Mr. INHOFE, Mr. LIEBERMAN, Mr.

MCCAIN, Mr. MURKOWSKI, Mr. ROBERTS, Mr. SESSIONS, Mr. SHELBY,

Mr. SMITH of New Hampshire, Mr. TORRICELLI, and Mr. WARNER) 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 allow taxfree expenditures from education individual retirement

accounts for elementary and secondary school expenses

and to increase the maximum annual amount of contributions to such accounts.

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. SHORT TITLE.

2 This Act may be cited as the ‘‘Parent and Student

3 Savings Account PLUS Act’’.

4 SEC. 2. MODIFICATIONS TO EDUCATION INDIVIDUAL RE5 TIREMENT ACCOUNTS.

6 (a) TAX-FREE EXPENDITURES FOR ELEMENTARY

7 AND SECONDARY SCHOOL EXPENSES.—

8 (1) IN GENERAL.—Section 530(b)(2) of the In9 ternal Revenue Code of 1986 is amended to read as

10 follows:

11 ‘‘(2) QUALIFIED EDUCATION EXPENSES.—

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

13 education expenses’ means—

14 ‘‘(i) qualified higher education ex15 penses (as defined in section 529(e)(3)),

16 and

17 ‘‘(ii) qualified elementary and second18 ary education expenses (as defined in para19 graph (4)).

20 Such expenses shall be reduced as provided in

21 section 25A(g)(2).

22 ‘‘(B) QUALIFIED STATE TUITION PRO23 GRAMS.—Such term shall include amounts paid

24 or incurred to purchase tuition credits or cer25 tificates, or to make contributions to an ac26 count, under a qualified State tuition program
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1 (as defined in section 529(b)) for the benefit of

2 the beneficiary of the account.’’

3 (2) QUALIFIED ELEMENTARY AND SECONDARY

4 EDUCATION EXPENSES.—Section 530(b) of such

5 Code is amended by adding at the end the following

6 new paragraph:

7 ‘‘(4) QUALIFIED ELEMENTARY AND SECONDARY

8 EDUCATION EXPENSES.—

9 ‘‘(A) IN GENERAL.—The term ‘qualified el10 ementary and secondary education expenses’

11 means tuition, fees, tutoring, special needs serv12 ices, books, supplies, equipment, transportation,

13 and supplementary expenses required for the

14 enrollment or attendance of the designated ben15 eficiary of the trust at a public, private, or sec16 tarian school.

17 ‘‘(B) SPECIAL RULE FOR

18 HOMESCHOOLING.—Such term shall include ex19 penses described in subparagraph (A) required

20 for education provided for homeschooling if the

21 requirements of any applicable State or local

22 law are met with respect to such education.

23 ‘‘(C) SCHOOL.—The term ‘school’ means

24 any school which provides elementary education
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1 or secondary education (through grade 12), as

2 determined under State law.’’

3 (3) CONFORMING AMENDMENTS.—Subsections

4 (b)(1) and (d)(2) of section 530 of such Code are

5 each amended by striking ‘‘higher’’ each place it ap6 pears in the text and heading thereof.

7 (b) INCREASE IN MAXIMUM ANNUAL CONTRIBU8 TIONS.—

9 (1) IN GENERAL.—Section 530(b)(1)(A)(iii) of

10 the Internal Revenue Code of 1986 is amended by

11 striking ‘‘$500’’ and inserting ‘‘$2,000’’.

12 (2) CONFORMING AMENDMENTS.—

13 (A) Section 530(d)(4)(C) of such Code is

14 amended by striking ‘‘$500’’ and inserting

15 ‘‘$2,000’’.

16 (B) Section 4973(e)(1)(A) of such Code is

17 amended by striking ‘‘$500’’ and inserting

18 ‘‘$2,000’’.

19 (c) EFFECTIVE DATE; REFERENCES.—

20 (1) EFFECTIVE DATE.—The amendments made

21 by this section shall take effect as if included in the

22 amendments made by section 213 of the Taxpayer

23 Relief Act of 1997.

24 (2) REFERENCES.—Any reference in this sec25 tion to any section of the Internal Revenue Code of
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1 1986 shall be a reference to such section as added

2 by the Taxpayer Relief Act of 1997.

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