Enhanced 529 - S.A.V.E. Act

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. Short title This Act may be cited as the Enhanced 529 - Setting Aside for a Valuable Education Act Enhanced 529 - S.A.V.E. Act 2. Credit for contributions to 529 plans (a) In general Paragraph (1) of section 25B(d) and , and (D) the amount of the contributions to qualified tuition programs described in paragraph (2) made by the eligible individual. . (b) Contributions to qualified tuition programs Subsection (d) of section 25B (2) Contributions to qualified tuition programs (A) In general The term contributions to qualified tuition programs (i) the eligible individual has the power to authorize distributions and otherwise administer the account, and (ii) the designated beneficiary of such purchase or contribution is the eligible individual, the eligible individual’s spouse, or an individual with respect to whom the eligible individual is allowed a deduction under section 151. (B) Limitation based on compensation The amount treated as a qualified savings contribution by reason of subparagraph (A) for any taxable year shall not exceed the sum of— (i) the compensation (as defined in section 219(f)(1)) includible in the eligible individual’s gross income for the taxable year, and (ii) the amount excluded from the eligible individual’s gross income under section 112 (relating to combat pay) for such year. (C) Determination of adjusted gross income Solely for purposes of determining the applicable percentage under subsection (b) which applies with respect to the amount treated as contributions to qualified tuition programs, adjusted gross income (determined without regard to this subparagraph) shall be increased by the excess (if any) of— (i) the social security benefits received during the taxable year (within the meaning of section 86), over (ii) the amount included in gross income for such year under section 86. . (c) Conforming amendments (1) Section 25B qualified retirement savings qualified savings (2) The heading of subsection (d) of section 25B of such Code is amended by striking retirement (3) Subparagraph (A) of section 25B(d)(3) of such Code, as redesignated by subsection (a), is amended— (A) by striking paragraph (1) paragraph (1) or (2) (B) by striking paragraph (1) paragraph (1), or (2), as the case may be, (4) The heading for section 25B of such Code is amended by striking and IRA contributions , IRA contributions, and qualified tuition program contributions (5) The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 25B and inserting the following new item: Sec. 25B. Elective deferrals, IRA contributions, and qualified tuition program contributions by certain individuals. (d) Effective date The amendments made by this section shall apply to contributions made after December 31, 2014, in taxable years ending after such date. 3. Exclusion from gross income for employer contributions to qualified tuition programs (a) In general Part III of subchapter B of chapter 1 127A. Employer contributions to qualified tuition programs (a) In general Gross income of an employee does not include amounts paid by the employer as contributions to a qualified tuition program held by the employee or spouse of the employee if the contributions are made pursuant to a program which is described in subsection (c). (b) Maximum exclusion The amount excluded from the gross income of an employee under this section for the taxable year shall not exceed $600. (c) Qualified tuition assistance program For purposes of this section, a qualified tuition assistance program is a separate written plan of an employer for the benefit of such employer's employees— (1) under which the employer makes matching contributions to qualified tuition programs of— (A) such employees, (B) their spouses, or (C) any individual with respect to whom such an employee or spouse— (i) is allowed a deduction under section 151, and (ii) has the power to authorize distributions and otherwise administer such individual's account under the qualified tuition program, and (2) which meets requirements similar to the requirements of paragraphs (2), (3), (4), (5), and (6) of section 127(b). (d) Definitions and special rules For purposes of this section— (1) Qualified tuition program The term qualified tuition program (2) Employee and employer The terms employee employer (3) Applicable rules Rules similar to the rules of paragraphs (4), (5), (6), and (7) of section 127(c) shall apply. (e) Inflation adjustment (1) In general In the case of any taxable year beginning in a calendar year after 2015, the $600 amount contained in subsection (b)(1) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2014 calendar year 1992 Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50. (f) Cross reference For reporting and recordkeeping requirements, see section 6039D. . (b) Exclusion from employment taxes (1) Sections 3121(a)(18), 3306(b)(13), and 3401(a)(18) of such Code are each amended by inserting , 127A 127 (2) Section 3231(e)(6) of such Code is amended by striking section 127 section 127 or 127A (c) Reporting and recordkeeping requirements Section 6039D(d)(1) of such Code is amended by inserting , 127A 127 (d) Other conforming amendments (1) Sections 125(f), 414(n)(3)(C), and 414(t)(2) of such Code are each amended by inserting , 127A 127 (2) Section 132(j)(8) of such Code is amended by striking section 127 section 127 or 127A (3) Section 1397(a)(2)(A) of such Code is amended by inserting at the end the following new clause: (iii) Any amount paid or incurred by an employer which is excludable from the gross income of an employee under section 127A, but only to the extent paid or incurred to a person not related to the employer. . (4) Section 209(a)(15) of the Social Security Act ( 42 U.S.C. 409(a)(15) or 129 , 127A, or 129 (e) Clerical amendment The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 127 the following new item: Sec. 127A. Employer contributions to qualified tuition programs. (f) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

Summary: Enhanced 529 - Setting Aside for a Valuable Education Act or the Enhanced 529 - S.A.V.E. Act - Amends the Internal Revenue Code to: (1) allow a tax credit for contributions to a qualified tuition program (529 tuition program); and (2) allow an exclusion, up to $600, from the gross income of an employee for employer contributions to a 529 tuition program.