II 

116TH CONGRESS 

1ST SESSION S. 220 

To amend the Internal Revenue 1986 to provide for distributions from 529 

programs to pay apprenticeship and qualified early education expenses, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 24, 2019 

Mr. GARDNER introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue 1986 to provide for distributions from 529 programs to pay apprenticeship and 

qualified early education expenses, 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 ‘‘529 Expansion and 

5 Modernization Act of 2019’’. 

6 SEC. 2. EXPANSION OF 529 PROGRAM EXPENSES. 

7 (a) DISTRIBUTIONS FROM QUALIFIED TUITION PRO8 GRAMS FOR CERTAIN EXPENSES ASSOCIATED WITH REGVerDate Sep 11 2014 01:03 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S220.IS S220

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1 ISTERED APPRENTICESHIP PROGRAMS.—Section 

2 529(e)(3) of the Internal Revenue Code of 1986 is amend3 ed by adding at the end the following new subparagraph: 

4 ‘‘(C) CERTAIN EXPENSES ASSOCIATED

5 WITH REGISTERED APPRENTICESHIP PRO6 GRAMS.—The term ‘qualified higher education 

7 expenses’ shall include books, supplies, and 

8 equipment required for the enrollment or at9 tendance of a designated beneficiary in an ap10 prenticeship program registered and certified 

11 with the Secretary of Labor under section 1 of 

12 the National Apprenticeship Act (29 U.S.C. 

13 50).’’. 

14 (b) SPECIAL RULES FOR 529 PROGRAMS WITH RE15 SPECT TO QUALIFIED EARLY EDUCATION EXPENSES.— 

16 Section 529(e)(3) of the Internal Revenue Code of 1986, 

17 as amended by subsection (c), is amended by adding at 

18 the end the following new subparagraph: 

19 ‘‘(D) SPECIAL RULES PERMITTING LIM20 ITED TREATMENT OF QUALIFIED EARLY EDU21 CATION EXPENSES.— 

22 ‘‘(i) IN GENERAL.—Except as pro23 vided in clause (ii), qualified early edu24 cation expenses shall be treated as quali25 fied higher education expenses. 


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1 ‘‘(ii) LIMITATION.—If the aggregate 

2 amount of cash distributions from all 

3 qualified tuition programs described in 

4 subsection (b)(1)(A)(ii) with respect to a 

5 beneficiary for qualified early education ex6 penses during any taxable year exceeds 

7 $10,000, such excess shall be treated for 

8 purposes of subsection (c)(3) as distribu9 tions in excess of the qualified higher edu10 cation expenses of the beneficiary. 

11 ‘‘(iii) QUALIFIED EARLY EDUCATION

12 EXPENSES.—For purposes of this subpara13 graph, the term ‘qualified early education 

14 expenses’ means expenses for providing 

15 educational and other care to a child under 

16 age 5 (including childcare provided before 

17 and after school), as determined under the 

18 law of the State, pursuant to attendance at 

19 a school or facility licensed in the State for 

20 such purpose.’’. 

21 (c) CAREER AND TECHNICAL EDUCATION EX22 PENSES.—Section 529(e)(3) of the Internal Revenue Code 

23 of 1986, as amended by the preceding subsections, is 

24 amended by adding at the end the following new subpara25 graph: 


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1 ‘‘(E) TREATMENT OF CAREER AND TECH2 NICAL EDUCATION EXPENSES.—Such term shall 

3 include expenses for books, supplies, and equip4 ment required for enrollment or attendance of 

5 a designated beneficiary in a career and tech6 nical education program (as defined in section 

7 3 of the Carl D. Perkins Career and Technical 

8 Education Act of 2006 (20 U.S.C. 2302)).’’. 

9 (d) INDUSTRY INTERMEDIARY EDUCATION EX10 PENSES.—Section 529(e)(3) of the Internal Revenue Code 

11 of 1986, as amended by the preceding subsections, is 

12 amended by adding at the end the following new subpara13 graph: 

14 ‘‘(F) TREATMENT OF INDUSTRY INTER15 MEDIARY EDUCATION EXPENSES.— 

16 ‘‘(i) IN GENERAL.—Such term shall 

17 include expenses for books, supplies, and 

18 equipment required for enrollment or at19 tendance of a designated beneficiary in an 

20 industry intermediary education program. 

21 ‘‘(ii) INDUSTRY INTERMEDIARY EDU22 CATION PROGRAM.—For purposes of this 

23 subparagraph, the term ‘industry inter24 mediary education program’ means any en25 tity that— 


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1 ‘‘(I) in order to accelerate ap2 prenticeship program development and 

3 help establish new apprenticeship 

4 partnerships at the national, State, or 

5 regional level, serves as a conduit be6 tween an employer and an entity, such 

7 as an industry partner, the Depart8 ment of Labor, or a State agency re9 sponsible for workforce development 

10 programs, 

11 ‘‘(II) demonstrates a capacity to 

12 work with employers and other key 

13 partners to identify workforce trends 

14 and foster public-private funding to 

15 establish new apprenticeship pro16 grams, and 

17 ‘‘(III) is a business, a consortium 

18 of businesses, a business-related non19 profit organization (including industry 

20 associations and business federations), 

21 a private organization functioning as 

22 a workforce intermediary for the ex23 press purpose of serving the needs of 

24 businesses (including community25 based nonprofit service providers and 


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1 industry-aligned training providers), 

2 or a consortium of any of such enti3 ties.’’. 

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

5 this section shall apply to contributions made and distribu6 tions paid after December 31, 2019. 

7 SEC. 3. EMPLOYER CONTRIBUTIONS TO QUALIFIED TUI8 TION PROGRAMS. 

9 (a) IN GENERAL.—Subsection (a) of section 132 of 

10 the Internal Revenue Code of 1986 is amended by striking 

11 ‘‘or’’ at the end of paragraph (7), by striking the period 

12 at the end of paragraph (8) and inserting ‘‘, or’’, and by 

13 adding at the end the following new paragraph: 

14 ‘‘(9) qualified tuition program contributions.’’. 

15 (b) QUALIFIED TUITION PROGRAM CONTRIBU16 TIONS.—Section 132 of the Internal Revenue Code of 

17 1986 is amended by redesignating subsection (o) as sub18 section (p) and by inserting after subsection (n) the fol19 lowing new subsection: 

20 ‘‘(o) QUALIFIED TUITION PROGRAM CONTRIBU21 TIONS.—For purposes of this section— 

22 ‘‘(1) IN GENERAL.—The term ‘qualified tuition 

23 program contributions’ means contributions (includ24 ing matching contributions) made by an employer 


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1 directly to a qualified tuition program (as described 

2 in section 529) designated by an employee if— 

3 ‘‘(A) such contribution is made to an ac4 count under such program for which the des5 ignated beneficiary is the employee or a mem6 ber of the family of the employee (within the 

7 meaning of section 529(e)(2)), and 

8 ‘‘(B) such contribution is made in connec9 tion with a qualified payroll deduction contribu10 tion program established by the employer. 

11 ‘‘(2) QUALIFIED PAYROLL DEDUCTION CON12 TRIBUTION PROGRAM.—For purposes of this sub13 section, the term ‘qualified payroll deduction con14 tribution program’ means a program established by 

15 an employer— 

16 ‘‘(A) under which employees may elect to 

17 make contributions to accounts described in 

18 paragraph (1)(A) which reduce the amount of 

19 wages received directly by such employee by the 

20 amount of such contribution, and 

21 ‘‘(B) which is made available on substan22 tially the same terms to each member of a 

23 group of employees which is defined under a 

24 reasonable classification set up by the employer 

25 which does not discriminate in favor of highly 


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1 compensated employees (as defined in section 

2 414(q)). 

3 ‘‘(3) LIMITATION ON EXCLUSION.—The amount 

4 of qualified tuition program contributions which may 

5 be excluded from gross income under subsection 

6 (a)(9) with respect to any employee shall not exceed 

7 $500 in any calendar year. 

8 ‘‘(4) INFLATION ADJUSTMENT.— 

9 ‘‘(A) IN GENERAL.—In the case of any 

10 taxable year beginning in a calendar year after 

11 2020, the $500 amount contained in paragraph 

12 (3) shall be increased by an amount equal to— 

13 ‘‘(i) such dollar amount, multiplied by 

14 ‘‘(ii) the cost-of-living adjustment de15 termined under section 1(f)(3) for the cal16 endar year in which the taxable year be17 gins, determined by substituting ‘calendar 

18 year 2019’ for ‘calendar year 2016’ in sub19 paragraph (A)(ii) thereof. 

20 ‘‘(B) ROUNDING.—Any increase deter21 mined under subparagraph (A) shall be rounded 

22 to the nearest multiple of $25.’’. 


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

2 this section shall apply to contributions made after De3 cember 31, 2019. 

Æ 


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