401(Kids) Education Savings Account Act of 2014

To amend the Internal Revenue Code of 1986 to improve and expand Coverdell education savings accounts. 1. Short title This Act may be cited as the 401(Kids) Education Savings Account Act of 2014 2. Elimination of income-based reduction in permitted contributions to Coverdell education savings accounts Paragraph (1) of section 530(c) to an account under this section to an account under this section in a taxable year beginning before January 1, 2015, 3. Increase in annual contribution limitation for Coverdell education savings accounts (a) In general Clause (iii) of section 530(b)(1)(A) $2,000 the dollar amount in effect under section 2503(b) (relating to exclusion from gifts) for the taxable year (b) Effective date The amendment made by this section shall apply to contributions made in taxable years beginning after December 31, 2014. 4. Allowance of home school expenses as qualified education expenses for purposes of a Coverdell education savings account (a) In general Paragraph (3) of section 530(b) (C) Private school For purposes of this section, the term private school . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2014. 5. Qualified distributions from a Coverdell education savings account for first home purchases (a) In general Paragraph (1) of section 530(b) of the Internal Revenue Code of 1986 is amended by striking qualified education expenses qualified expenses (b) Qualified expenses Subsection (b) of section 530 of the Internal Revenue Code of 1986, as amended by this Act, is amended by redesignating paragraphs (2), (3), and (4) as paragraphs (4), (5), and (6), respectively, and by inserting after paragraph (1) the following new paragraphs: (2) Qualified expenses The term qualified expenses (A) qualified first-time homebuyer expenses, and (B) qualified education expenses. (3) Qualified first-time homebuyer expenses (A) In general The term qualified first-time homebuyer expenses (B) Definitions The terms first-time homebuyer qualified acquisition costs principal residence . (c) Conforming amendments (1) Paragraph (4)(A)(ii) of section 530(b) of the Internal Revenue Code of 1986, as redesignated by subsection (b), is amended by striking as defined in paragraph (3) as defined in paragraph (5) (2) Subparagraphs (A), (B), and (D) of section 530(d)(1) of such Code are each amended by striking qualified education expenses qualified expenses (3) The heading of paragraph (2) of section 530(d) of such Code is amended by striking education expenses expenses (4) The heading of paragraph (4) of section 530(d) of such Code is amended by striking educational expenses expenses (5) Subclause (I) of section 529(c)(3)(B)(vi) of such Code is amended by striking to which clauses (i) and (ii) and section 530(d)(2)(A) apply for qualified higher education expenses to which clauses (i) and (ii) apply and for qualified education expenses to which section 530(d)(2)(A) applies (6) Clause (vi) of section 529(c)(3)(B) of such Code is amended by striking and section 530(d)(2)(A). and the amount of the exclusion with respect to qualified education expenses under section 530(d)(2)(A). (d) Effective date The amendments made by this section shall apply to distributions made in taxable years beginning after December 31, 2014. 6. Qualified rollover contributions from Coverdell education savings accounts to Roth IRAs (a) In general Paragraph (5) of section 530(d) of the Internal Revenue Code of 1986 is amended by inserting , or into a Roth IRA of the beneficiary as of such date (b) Conforming amendment; technical correction Paragraph (1) of section 408A(e) of the Internal Revenue Code of 1986 is amended to read as follows: (1) In general The term qualified rollover contribution (A) such rollover contribution meets the requirements of section 408(d)(3), (B) in the case of a rollover contribution from an eligible retirement plan described in clause (iii), (iv), (v), or (vi) of section 402(c)(8)(B), such contribution meets the requirements of section 402(c), 403(b)(8), or 457(e)(16), whichever is applicable, and (C) in the case of a rollover contribution from a Coverdell education savings account, such contribution meets the requirements of section 530(d)(5). For purposes of section 408(d)(3)(B), there shall be disregarded any qualified rollover contribution from an individual retirement plan (other than a Roth IRA) to a Roth IRA. . (c) Effective date The amendments made by this section shall apply to rollover contributions made in taxable years beginning after December 31, 2014.

Summary: 401(Kids) Education Savings Account Act of 2014 - Amends the Internal Revenue Code to: (1) eliminate after 2014 the income-based reduction of contributions to Coverdell education savings accounts, (2) increase the annual contribution limit for such accounts, (3) allow the use of such an account to pay home school expenses and the acquisition costs of a first-time homebuyer, and (4) allow tax-free rollovers of amounts in a Coverdell education savings account to a Roth individual retirement account (Roth IRA).