I 
109TH CONGRESS 
2D SESSION 
H. R. 5314 
To amend the Internal Revenue Code of 1986 to improve and expand 
education savings accounts. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 9, 2006 
Mr. SHAW (for himself, Mr. KIRK, Mr. FOLEY, Mr. COLE of Oklahoma, Mr. 
WELLER, Mrs. MILLER of Michigan, Mrs. BIGGERT, Mr. RAMSTAD, and 
Mr. DAVIS of Kentucky) introduced the following bill; which was referred 
to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to improve 
and expand 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 ‘‘401Kids Family Sav-
ings Act of 2006’’. 
SEC. 2. EXTENSION OF DATE FOR SUNSET OF CERTAIN 
EDUCATION SAVINGS INCENTIVES. 
In the case of the provisions of, and amendments 
made by, subtitle A of title IV of the Economic Growth 
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and Tax Relief Reconciliation Act of 2001 (relating to 
education savings incentives), section 901 of such Act (re-
lating to sunset of provisions of Act) shall be applied by 
substituting ‘‘December 31, 2015’’ for ‘‘December 31, 
2010’’ in subsection (a)(1) thereof. 
SEC. 3. DISTRIBUTIONS FROM EDUCATION SAVINGS AC-
COUNTS 
FOR 
FIRST 
HOME 
PURCHASES 
TREATED AS QUALIFIED DISTRIBUTIONS. 
(a) IN GENERAL.—Subsections (b)(1), (d)(2)(A), 
(d)(2)(B), (d)(2)(C)(ii)(II), and (d)(2)(D) of section 530 
of the Internal Revenue Code of 1986 are each amended 
by striking ‘‘qualified education expenses’’ and inserting 
‘‘qualified expenses’’. 
(b) QUALIFIED EXPENSES.—Subsection (b) of sec-
tion 530 of such Code is amended— 
(1) by redesignating paragraphs (2) through 
(4) as paragraphs (3) through (5), respectively, and 
by inserting after paragraph (1) the following new 
paragraph: 
‘‘(2) QUALIFIED EXPENSES.—The term ‘quali-
fied expenses’ means— 
‘‘(A) qualified education expenses (as de-
fined in paragraph (3)), and 
‘‘(B) qualified first-time homebuyer ex-
penses (as defined in paragraph (4)).’’, and 
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(2) by redesignating paragraphs (4) and (5) (as 
redesignated by paragraph (1)) as paragraphs (5) 
and (6), respectively, and by inserting after para-
graph (3) the following new paragraph: 
‘‘(4) QUALIFIED FIRST-TIME HOMEBUYER EX-
PENSES.—The term ‘qualified first-time homebuyer 
expenses’ means, in the case of a designated bene-
ficiary who is a first-time homebuyer, the qualified 
acquisition costs with respect to a principal resi-
dence of such beneficiary. Terms used in this para-
graph shall have the same meaning as when used in 
section 72(t)(8).’’. 
(c) CONFORMING AMENDMENT.—The heading for 
paragraph (2) of section 530(d) of such Code is amended 
by striking ‘‘QUALIFIED EDUCATION EXPENSES’’ and in-
serting ‘‘QUALIFIED EXPENSES’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 4. ROLLOVERS FROM EDUCATION SAVINGS ACCOUNTS 
TO ROTH IRAS. 
(a) IN GENERAL.—Paragraph (5) of section 530(d) 
of the Internal Revenue Code of 1986, as amended by sec-
tion 5, is amended by inserting ‘‘or a Roth IRA’’ after 
‘‘another 401Kids savings account’’. 
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(b) CONFORMING AMENDMENT.—Subsection (e) of 
section 408A of such Code is amended by inserting the 
following after the second sentence: ‘‘Such term includes 
a rollover contribution to a Roth IRA from a 401Kids sav-
ings account described in section 530(d)(5).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 5. RENAMING COVERDELL EDUCATION SAVINGS AC-
COUNTS AS 401KIDS SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Section 530 of the Internal Rev-
enue Code of 1986 is amended by striking ‘‘Coverdell edu-
cation savings account’’ each place it appears and insert-
ing ‘‘401Kids savings account’’. 
(b) CONFORMING AMENDMENTS.— 
(1) The following provisions of the Internal 
Revenue Code of 1986 are amended by striking 
‘‘Coverdell education savings’’ each place it appears 
and inserting ‘‘401Kids savings’’: 
(A) Section 26(b)(2)(E). 
(B) Section 72(e)(9). 
(C) Section 135(c)(2)(C). 
(D) Section 529(c)(6). 
(E) Subsections (a) and (e) of section 
4973(a). 
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(F) Subsections (c) and (e) of section 
4975. 
(G) Section 6693(a)(2)(E). 
(2) The headings for the following provisions of 
such Code are amended by striking ‘‘COVERDELL 
EDUCATION SAVINGS’’ and inserting ‘‘401KIDS SAV-
INGS’’: 
(A) Section 72(e)(9). 
(B) Section 135(c)(2)(C). 
(C) Section 529(c)(3)(B)(vi). 
(D) Section 530(b)(1). 
(E) Section 4973(e). 
(F) Section 4975(c)(5). 
(3) The heading for section 4973(e) of such 
Code is amended by striking ‘‘COVERDELL EDU-
CATION SAVINGS’’ and inserting ‘‘401KIDS SAV-
INGS’’. 
(4) The heading for section 530 of such Code 
is amended to read as follows: 
‘‘SEC. 530. 401KIDS SAVINGS ACCOUNTS.’’. 
(5) The item in the table of contents for part 
VII of subchapter F of chapter 1 of such Code relat-
ing to section 530 is amended to read as follows: 
‘‘Sec. 530. 401Kids savings accounts.’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
Æ 
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