I 
109TH CONGRESS 
1ST SESSION H. R. 3585 
To amend the Internal Revenue Code of 1986 to exclude from gross income 
employer contributions to college tuition plans and education savings accounts. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 28, 2005 
Mr. PORTER (for himself, Mr. MCKEON, Mr. GARRETT of New Jersey, Ms. 
GINNY
BROWN-WAITE
of 
Florida, 
Mr. 
RUPPERSBERGER, 
Mr. 
HOSTETTLER, Mr. KLINE, Mr. PAUL, Mr. SOUDER, Mr. NEUGEBAUER, 
Mr. PLATTS, Ms. ROS-LEHTINEN, and Mr. REHBERG) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to exclude 
from gross income employer contributions to college tui-
tion plans and education savings accounts. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Education Savings Act 
of 2005’’.
SEC. 2. EXCLUSION FROM GROSS INCOME FOR CONTRIBU-
TIONS TO EDUCATION SAVINGS ENTITIES. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
items specifically excluded from gross income) is amended 
by inserting after section 127 the following new section: 
‘‘SEC. 127A. CONTRIBUTIONS TO EDUCATION SAVINGS EN-
TITIES. 
‘‘(a) IN GENERAL.—Gross income of an employee 
does not include amounts paid by the employer as con-
tributions to an education savings entity held by the em-
ployee or spouse of the employee if the contributions are 
made pursuant to a program which is described in sub-
section (b). 
‘‘(b) EDUCATIONAL
ASSISTANCE
PROGRAM.—For 
purposes of this section, an educational assistance pro-
gram is a separate written plan of an employer for the 
benefit of such employer’s employees— 
‘‘(1) under which the employer makes contribu-
tions to education savings entities of such employees 
or spouses of employees, and 
‘‘(2) which meets requirements similar to the 
requirements of paragraphs (2), (3), (4), (5), and 
(6) of section 127(b). 
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) EDUCATION SAVINGS ENTITY.—The term 
‘education savings entity’ means— 
‘‘(A) a qualified tuition program (as de-
fined in section 529(b)), and 
‘‘(B) a Coverdell education savings account 
(as defined in section 530(b)). 
‘‘(2) EMPLOYEE AND EMPLOYER.—The terms 
‘employee’ and ‘employer’ shall have the meaning 
given such terms by paragraphs (2) and (3), respec-
tively, of section 127(c). 
‘‘(3) APPLICABLE RULES.—Rules similar to the 
rules of paragraphs (4), (5), (6), and (7) of section 
127(c) shall apply. 
‘‘(d) CROSS REFERENCE.—For reporting and record-
keeping 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 in-
serting ‘‘127A,’’ after ‘‘127,’’ each place it appears. 
(2) Section 3231(e)(6) of such Code is amended 
by striking ‘‘section 127’’ and inserting ‘‘section 127 
or 127A’’. 
(c) REPORTING
AND RECORDKEEPING REQUIRE-
MENTS.—Section 6039D(d)(1) of such Code is amended 
by inserting ‘‘127A,’’ after ‘‘127,’’.
(d) OTHER CONFORMING AMENDMENTS.— 
(1) Section 51A(b)(5)(B) of such Code is 
amended by striking ‘‘or’’ at the end of clause (iii), 
by redesignating clause (iv) as clause (v), and by in-
serting after clause (iii) the following new clause: 
‘‘(iv) section 127A (relating to con-
tributions to education savings entities), 
but only to the extent paid or incurred to 
a person not related to the employer, or’’. 
(2) 
Sections 
125(f), 
414(n)(3)(C), 
and 
414(t)(2) of such Code are each amended by insert-
ing ‘‘127A,’’ after ‘‘127,’’ each place it appears. 
(3) Section 132(j)(8) of such Code is amended 
by striking ‘‘section 127’’ and inserting ‘‘section 127 
or 127A’’. 
(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 in-
curred to a person not related to the em-
ployer.’’.
(5) Section 209(15) of the Social Security Act 
(42 U.S.C. 409(15)) is amended by striking ‘‘or 
129’’ and inserting ‘‘, 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. Contributions to education savings entities.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to remuneration paid after Decem-
ber 31, 2005. 
Æ