II 

113TH CONGRESS 

2D SESSION S. 2882 

To amend the Internal Revenue Code of 1986 to allow certain individuals 

a credit against income tax for contributions to 529 plans, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 18, 2014 

Mr. MCCONNELL 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 certain individuals a credit against income tax for contributions to 529 plans, 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 ‘‘Enhanced 529 - Set5 ting Aside for a Valuable Education Act’’ or the ‘‘En6 hanced 529 - S.A.V.E. Act’’. 

7 SEC. 2. CREDIT FOR CONTRIBUTIONS TO 529 PLANS. 

8 (a) IN GENERAL.—Paragraph (1) of section 25B(d) 

9 of the Internal Revenue Code of 1986 is amended by strikVerDate Sep 11 2014 00:10 Oct 01, 2014 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2882.IS S2882

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1 ing ‘‘and’’ at the end of subparagraph (B)(ii), by striking 

2 the period at the end of subparagraph (C) and inserting 

3 ‘‘, and’’, and by adding at the end the following new sub4 paragraph: 

5 ‘‘(D) the amount of the contributions to 

6 qualified tuition programs described in para7 graph (2) made by the eligible individual.’’. 

8 (b) CONTRIBUTIONS TO QUALIFIED TUITION PRO9 GRAMS.—Subsection (d) of section 25B of the Internal 

10 Revenue Code of 1986 is amended by redesignating para11 graph (2) as paragraph (3) and by inserting after para12 graph (1) the following new paragraph: 

13 ‘‘(2) CONTRIBUTIONS TO QUALIFIED TUITION

14 PROGRAMS.— 

15 ‘‘(A) IN GENERAL.—The term ‘contribu16 tions to qualified tuition programs’ means any 

17 purchase or contribution described in paragraph 

18 (1)(A) of section 529(b) to a qualified tuition 

19 program (as defined in such section) if— 

20 ‘‘(i) the eligible individual has the 

21 power to authorize distributions and other22 wise administer the account, and 

23 ‘‘(ii) the designated beneficiary of 

24 such purchase or contribution is the eligi25 ble individual, the eligible individual’s 


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1 spouse, or an individual with respect to 

2 whom the eligible individual is allowed a 

3 deduction under section 151. 

4 ‘‘(B) LIMITATION BASED ON COMPENSA5 TION.—The amount treated as a qualified sav6 ings contribution by reason of subparagraph 

7 (A) for any taxable year shall not exceed the 

8 sum of— 

9 ‘‘(i) the compensation (as defined in 

10 section 219(f)(1)) includible in the eligible 

11 individual’s gross income for the taxable 

12 year, and 

13 ‘‘(ii) the amount excluded from the el14 igible individual’s gross income under sec15 tion 112 (relating to combat pay) for such 

16 year. 

17 ‘‘(C) DETERMINATION OF ADJUSTED

18 GROSS INCOME.—Solely for purposes of deter19 mining the applicable percentage under sub20 section (b) which applies with respect to the 

21 amount treated as contributions to qualified 

22 tuition programs, adjusted gross income (deter23 mined without regard to this subparagraph) 

24 shall be increased by the excess (if any) of— 


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1 ‘‘(i) the social security benefits re2 ceived during the taxable year (within the 

3 meaning of section 86), over 

4 ‘‘(ii) the amount included in gross in5 come for such year under section 86.’’. 

6 (c) CONFORMING AMENDMENTS.— 

7 (1) Section 25B of the Internal Revenue Code 

8 of 1986 is amended by striking ‘‘qualified retirement 

9 savings’’ each place it appears and inserting ‘‘quali10 fied savings’’. 

11 (2) The heading of subsection (d) of section 

12 25B of such Code is amended by striking ‘‘RETIRE13 MENT’’. 

14 (3) Subparagraph (A) of section 25B(d)(3) of 

15 such Code, as redesignated by subsection (a), is 

16 amended— 

17 (A) by striking ‘‘paragraph (1)’’ the first 

18 place it appears and inserting ‘‘paragraph (1) 

19 or (2)’’, and 

20 (B) by striking ‘‘paragraph (1)’’ the sec21 ond place it appears and inserting ‘‘paragraph 

22 (1), or (2), as the case may be,’’. 

23 (4) The heading for section 25B of such Code 

24 is amended by striking ‘‘AND IRA CONTRIBU25 TIONS’’ and inserting ‘‘, IRA CONTRIBUTIONS, 


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1 AND QUALIFIED TUITION PROGRAM CONTRIBU2 TIONS’’. 

3 (5) The table of sections for subpart A of part 

4 IV of subchapter A of chapter 1 of such Code is 

5 amended by striking the item relating to section 25B 

6 and inserting the following new item: 

‘‘Sec. 25B. Elective deferrals, IRA contributions, and qualified tuition program 

contributions by certain individuals.’’. 

7 (d) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to contributions made after De9 cember 31, 2014, in taxable years ending after such date. 

10 SEC. 3. EXCLUSION FROM GROSS INCOME FOR EMPLOYER 

11 CONTRIBUTIONS TO QUALIFIED TUITION 

12 PROGRAMS. 

13 (a) IN GENERAL.—Part III of subchapter B of chap14 ter 1 of the Internal Revenue Code of 1986 is amended 

15 by inserting after section 127 the following new section: 

16 ‘‘SEC. 127A. EMPLOYER CONTRIBUTIONS TO QUALIFIED 

17 TUITION PROGRAMS. 

18 ‘‘(a) IN GENERAL.—Gross income of an employee 

19 does not include amounts paid by the employer as con20 tributions to a qualified tuition program held by the em21 ployee or spouse of the employee if the contributions are 

22 made pursuant to a program which is described in sub23 section (c). 


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1 ‘‘(b) MAXIMUM EXCLUSION.—The amount excluded 

2 from the gross income of an employee under this section 

3 for the taxable year shall not exceed $600. 

4 ‘‘(c) QUALIFIED TUITION ASSISTANCE PROGRAM.— 

5 For purposes of this section, a qualified tuition assistance 

6 program is a separate written plan of an employer for the 

7 benefit of such employer’s employees— 

8 ‘‘(1) under which the employer makes matching 

9 contributions to qualified tuition programs of— 

10 ‘‘(A) such employees, 

11 ‘‘(B) their spouses, or 

12 ‘‘(C) any individual with respect to whom 

13 such an employee or spouse— 

14 ‘‘(i) is allowed a deduction under sec15 tion 151, and 

16 ‘‘(ii) has the power to authorize dis17 tributions and otherwise administer such 

18 individual’s account under the qualified 

19 tuition program, and 

20 ‘‘(2) which meets requirements similar to the 

21 requirements of paragraphs (2), (3), (4), (5), and 

22 (6) of section 127(b). 

23 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur24 poses of this section— 


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1 ‘‘(1) QUALIFIED TUITION PROGRAM.—The term 

2 ‘qualified tuition program’ means a qualified tuition 

3 program as defined in section 529(b). 

4 ‘‘(2) EMPLOYEE AND EMPLOYER.—The terms 

5 ‘employee’ and ‘employer’ shall have the meaning 

6 given such terms by paragraphs (2) and (3), respec7 tively, of section 127(c). 

8 ‘‘(3) APPLICABLE RULES.—Rules similar to the 

9 rules of paragraphs (4), (5), (6), and (7) of section 

10 127(c) shall apply. 

11 ‘‘(e) INFLATION ADJUSTMENT.— 

12 ‘‘(1) IN GENERAL.—In the case of any taxable 

13 year beginning in a calendar year after 2015, the 

14 $600 amount contained in subsection (b)(1) shall be 

15 increased by an amount equal to— 

16 ‘‘(A) such dollar amount, multiplied by 

17 ‘‘(B) the cost-of-living adjustment deter18 mined under section 1(f)(3) for the calendar 

19 year in which the taxable year begins, deter20 mined by substituting ‘calendar year 2014’ for 

21 ‘calendar year 1992’ in subparagraph (B) 

22 thereof. 

23 Any increase determined under the preceding sen24 tence shall be rounded to the nearest multiple of 

25 $50. 


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1 ‘‘(f) CROSS REFERENCE.—For reporting and record2 keeping requirements, see section 6039D.’’. 

3 (b) EXCLUSION FROM EMPLOYMENT TAXES.— 

4 (1) Sections 3121(a)(18), 3306(b)(13), and 

5 3401(a)(18) of such Code are each amended by in6 serting ‘‘, 127A’’ after ‘‘127’’ each place it appears. 

7 (2) Section 3231(e)(6) of such Code is amended 

8 by striking ‘‘section 127’’ and inserting ‘‘section 127 

9 or 127A’’. 

10 (c) REPORTING AND RECORDKEEPING REQUIRE11 MENTS.—Section 6039D(d)(1) of such Code is amended 

12 by inserting ‘‘, 127A’’ after ‘‘127’’. 

13 (d) OTHER CONFORMING AMENDMENTS.— 

14 (1) Sections 125(f), 414(n)(3)(C), and 

15 414(t)(2) of such Code are each amended by insert16 ing ‘‘, 127A’’ after ‘‘127’’ each place it appears. 

17 (2) Section 132(j)(8) of such Code is amended 

18 by striking ‘‘section 127’’ and inserting ‘‘section 127 

19 or 127A’’. 

20 (3) Section 1397(a)(2)(A) of such Code is 

21 amended by inserting at the end the following new 

22 clause: 

23 ‘‘(iii) Any amount paid or incurred by 

24 an employer which is excludable from the 

25 gross income of an employee under section 


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1 127A, but only to the extent paid or in2 curred to a person not related to the em3 ployer.’’. 

4 (4) Section 209(a)(15) of the Social Security 

5 Act (42 U.S.C. 409(a)(15)) is amended by striking 

6 ‘‘or 129’’ and inserting ‘‘, 127A, or 129’’. 

7 (e) CLERICAL AMENDMENT.—The table of sections 

8 for part III of subchapter B of chapter 1 of such Code 

9 is amended by inserting after the item relating to section 

10 127 the following new item: 

‘‘Sec. 127A. Employer contributions to qualified tuition programs.’’. 

11 (f) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to taxable years beginning after 

13 the date of the enactment of this Act. 

Æ 


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