I 

113TH CONGRESS 

2D SESSION H. R. 5554 

To amend the Internal Revenue Code of 1986 to permit distributions from 

529 accounts for medical expenses of account owners who are veterans 

with disability ratings of greater than 50 percent. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 18, 2014 

Mr. BISHOP of New York (for himself and Mr. RANGEL) 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 permit 

distributions from 529 accounts for medical expenses 

of account owners who are veterans with disability ratings of greater than 50 percent. 

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 ‘‘Helping Wounded 

5 Warriors Cover Medical Expenses Act’’. 


SSpencer on DSK4SPTVN1PROD with BILLS
2 

•HR 5554 IH

1 SEC. 2. DISTRIBUTIONS FROM 529 ACCOUNTS FOR MEDICAL 

2 EXPENSES OF ACCOUNT OWNERS WHO ARE 

3 VETERANS WITH DISABILITY RATINGS OF 

4 GREATER THAN 50 PERCENT. 

5 (a) EXEMPTION FROM 529 PENALTY.—Section 

6 529(c)(6) of the Internal Revenue Code of 1986 is amend7 ed to read as follows: 

8 ‘‘(6) ADDITIONAL TAX.— 

9 ‘‘(A) IN GENERAL.—The tax imposed by 

10 section 530(d)(4) shall apply to any payment or 

11 distribution from a qualified tuition program in 

12 the same manner as such tax applies to a pay13 ment or distribution from a Coverdell education 

14 savings account. This paragraph shall not apply 

15 to any payment or distribution in any taxable 

16 year beginning before January 1, 2004, which 

17 is includible in gross income but used for quali18 fied higher education expenses of the designated 

19 beneficiary. 

20 ‘‘(B) EXCEPTION.—Subparagraph (A) 

21 shall not apply to any payment or distribution 

22 from a qualified tuition program to the owner 

23 of an account under such program if— 

24 ‘‘(i) at the time of such payment or 

25 distribution, the owner of such account is 

26 a veteran whom the Secretary of Veterans 


SSpencer on DSK4SPTVN1PROD with BILLS
3 

•HR 5554 IH

1 Affairs determines has a service-connected 

2 disability rated at 50 percent or more, and 

3 ‘‘(ii) in lieu of using such payment or 

4 distribution for qualified higher education 

5 expenses, such payment or distribution is 

6 used for medical care (as defined in section 

7 213(d)) for such owner. 

8 ‘‘(C) COORDINATION WITH MEDICAL EX9 PENSE DEDUCTION.—For purposes of deter10 mining the amount of the deduction under sec11 tion 213, any payment or distribution to which 

12 subparagraph (B) applies shall not be treated 

13 as an expense paid for medical care.’’. 

14 (b) EXCLUSION FROM INCOME.—Section 72(e)(6) of 

15 the Internal Revenue Code of 1986 is amended to read 

16 as follows: 

17 ‘‘(6) EXTENSION OF PARAGRAPH (2)(B) TO

18 QUALIFIED TUITION PROGRAMS AND COVERDELL

19 EDUCATION SAVINGS ACCOUNTS.— 

20 ‘‘(A) IN GENERAL.—Notwithstanding any 

21 other provision of this subsection, paragraph 

22 (2)(B) shall apply to amounts received under a 

23 qualified tuition program (as defined in section 

24 529(b)) or under a Coverdell education savings 

25 account (as defined in section 530(b)). The rule 


SSpencer on DSK4SPTVN1PROD with BILLS
4 

•HR 5554 IH

1 of paragraph (8)(B) shall apply for purposes of 

2 this paragraph. 

3 ‘‘(B) EXCEPTION.—In the case of an 

4 amount received under a qualified tuition pro5 gram (as defined in section 529(b)) which is 

6 not subject to the penalty under subparagraph 

7 (A) of section 529(c)(6) by reason of subpara8 graph (B) thereof— 

9 ‘‘(i) subparagraph (A) of this para10 graph shall not apply, and 

11 ‘‘(ii) the amount received which, but 

12 for this subparagraph, would be treated as 

13 income on the contract shall be treated as 

14 investment in the contract.’’. 

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

16 this section shall apply to payments and distributions after 

17 the date of the enactment of this Act. 

Æ 


SSpencer on DSK4SPTVN1PROD with BILLS