Boost Saving for College Act

To amend the Internal Revenue Code of 1986 to improve college savings under section 529 programs, and for other purposes. 1. Short title This Act may be cited as the Boost Saving for College Act 2. Credit for contributions to 529 plans (a) In general Subsection (d) of section 25B (2) Contributions to qualified tuition programs (A) In general The term qualified savings contribution (i) the taxpayer has the power to authorize distributions and otherwise administer the account, and (ii) the designated beneficiary of such purchase or contribution is the taxpayer, the taxpayer’s spouse, or an individual with respect to whom the taxpayer 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 taxpayer’s gross income for the taxable year, and (ii) the amount excluded from the taxpayer’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 a qualified savings contribution by reason of subparagraph (A), 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. . (b) Conforming amendments (1) Section 25B of such Code is amended by striking qualified retirement savings qualified savings (2) The subsection heading for section 25B(d) 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. (c) Effective date The amendments made by this section shall apply to contributions made after December 31, 2016, 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 (1) In general The amount excluded from the gross income of an employee under this section for the taxable year shall not exceed $1,000. (2) Inflation adjustment (A) In general In the case of any taxable year beginning in a calendar year after 2016, the $1,000 amount contained in paragraph (1) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) 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 2015 calendar year 1992 (B) Rounding Any increase determined under subparagraph (A) shall be rounded to the nearest multiple of $50. (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) 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 221(d)(2)(A) of such Code is amended by inserting 127A, 127 (4) 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. . (5) 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 December 31, 2016. 4. Special rollover to Roth IRA from long-term qualified tuition program (a) In general Paragraph (3) of section 529(c) (E) Special rollover to Roth IRA from long-term qualified tuition program For purposes of this section— (i) In general In the case of a distribution from a qualified tuition program which has been maintained by an account owner for the 10-year period ending on the date of such distribution— (I) subparagraph (A) shall not apply to any portion of such distribution which, not later than 60 days after such distribution, is paid into a Roth IRA maintained for the benefit of such account owner or the designated beneficiary under such qualified tuition program, and (II) such portion shall be treated as a rollover contribution for purposes of section 408A(e). (ii) Limitation Clause (i) shall only apply to so much of any distribution as does not exceed the lesser of— (I) the amount applicable to the account owner under section 408A(c)(2) for the taxable year, or (II) the aggregate amount contributed to the program (and earnings attributable thereto) before the 5-year period ending on the date of the distribution. . (b) Qualified rollover contribution Paragraph (1) of section 408A(e) of such Code is amended by striking the period at the end of subparagraph (B) and inserting , and (C) from a qualified tuition program to the extent provided in section 529(c)(3)(E). . (c) Effective date The amendments made by this section shall apply with respect to distributions after December 31, 2016. 5. Rollovers to ABLE programs from 529 programs (a) In general Clause (i) of section 529(c)(3)(C) or , or (III) to an ABLE account (as defined in section 529A(e)(6)) of the designated beneficiary. Subclause (III) shall not apply to so much of a distribution which, when added to all other contributions made to the ABLE account for the taxable year, exceeds the limitation under section 529A(b)(2)(B). . (b) Effective date The amendments made by this section shall apply to distributions after the date of the enactment of this Act.

Summary: Boost Saving for College Act This bill amends the Internal Revenue Code to modify the tax treatment of qualified tuition programs (known as 529 plans). The bill allows: (1) a nonrefundable tax credit for contributions of an individual to a 529 plan, and (2) an exclusion from the gross income of an employee of up to $1000 per year of employer contributions to a 529 plan. The bill also permits savings from a 529 plan to be rolled over tax-free into: (1) a Roth Individual Retirement Account of the owner or the beneficiary of a 529 plan that has been maintained for 10 years, and (2) an ABLE account of the designated beneficiary of the 529 plan. (Tax-favored ABLE [Achieving a Better Life Experience] accounts are designed to enable individuals with disabilities to save for and pay for disability-related expenses.)