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107TH CONGRESS
1ST SESSION
H. R. 249
To amend the Internal Revenue Code of 1986 to permit private educational
institutions to maintain qualified tuition programs and to provide that
distributions from such programs which are used to pay educational
expenses shall not be includible in gross income.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 30, 2001
Mr. BACHUS 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 permit
private educational institutions to maintain qualified tui-
tion programs and to provide that distributions from
such programs which are used to pay educational ex-
penses shall not be includible in gross income.
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 ‘‘College Savings Pro-
tection Act’’.
SEC. 2. MODIFICATIONS TO QUALIFIED TUITION PRO-
GRAMS.
(a) ELIGIBLE EDUCATIONAL INSTITUTIONS PER-
MITTED TO MAINTAIN QUALIFIED TUITION PROGRAMS.—
(1) IN GENERAL.—Section 529(b)(1) of the In-
ternal Revenue Code of 1986 (defining qualified
State tuition program) is amended by inserting ‘‘or
by one or more eligible educational institutions’’
after ‘‘maintained by a State or agency or instru-
mentality thereof ’’.
(2) PRIVATE
QUALIFIED
TUITION
PROGRAMS
LIMITED TO BENEFIT PLANS.—Clause (ii) of section
529(b)(1)(A) of such Code is amended by inserting
‘‘in the case of a program established and main-
tained by a State or agency or instrumentality there-
of,’’ before ‘‘may make’’.
(3) CONFORMING AMENDMENTS.—
(A) 
Sections 
72(e)(9), 
135(c)(2)(C),
135(d)(1)(D), 529, 530(b)(2)(B), 4973(e), and
6693(a)(2)(C) of such Code are each amended
by striking ‘‘qualified State tuition’’ each place
it appears and inserting ‘‘qualified tuition’’.
(B) The headings for sections 72(e)(9) and
135(c)(2)(C) of such Code are each amended by
striking ‘‘QUALIFIED STATE TUITION’’ and in-
serting ‘‘QUALIFIED TUITION’’.
(C) The headings for sections 529(b) and
530(b)(2)(B) of such Code are each amended
by striking ‘‘QUALIFIED STATE TUITION’’ and
inserting ‘‘QUALIFIED TUITION’’.
(D) The heading for section 529 of such
Code is amended by striking ‘‘STATE’’.
(E) The item relating to section 529 in the
table of sections for part VIII of subchapter F
of chapter 1 of such Code is amended by strik-
ing ‘‘State’’.
(b) EXCLUSION FROM GROSS INCOME
OF EDU-
CATION DISTRIBUTIONS FROM QUALIFIED TUITION PRO-
GRAMS.—
(1) IN GENERAL.—Section 529(c)(3)(B) of such
Code (relating to distributions) is amended to read
as follows:
‘‘(B) 
DISTRIBUTIONS
FOR
QUALIFIED
HIGHER EDUCATION EXPENSES.—For purposes
of this paragraph—
‘‘(i) 
IN-KIND
DISTRIBUTIONS.—No
amount shall be includible in gross income
under subparagraph (A) by reason of a
distribution which consists of providing a
benefit to the distributee which, if paid for
by the distributee, would constitute pay-
ment of a qualified higher education ex-
pense.
‘‘(ii) CASH
DISTRIBUTIONS.—In the
case of distributions not described in
clause (i), if—
‘‘(I) such distributions do not ex-
ceed the qualified higher education ex-
penses (reduced by expenses described
in clause (i)), no amount shall be in-
cludible in gross income, and
‘‘(II) in any other case, the
amount otherwise includible in gross
income shall be reduced by an amount
which bears the same ratio to such
amount as such expenses bear to such
distributions.
‘‘(iii) 
TREATMENT
AS
DISTRIBU-
TIONS.—Any benefit furnished to a des-
ignated beneficiary under a qualified tui-
tion program shall be treated as a distribu-
tion to the beneficiary for purposes of this
paragraph.
‘‘(iv) COORDINATION WITH HOPE AND
LIFETIME LEARNING CREDITS.—The total
amount of qualified higher education ex-
penses with respect to an individual for the
taxable year shall be reduced—
‘‘(I) 
as 
provided 
in 
section
25A(g)(2), and
‘‘(II) by the amount of such ex-
penses which were taken into account
in determining the credit allowed to
the taxpayer or any other person
under section 25A.
‘‘(v) COORDINATION WITH EDUCATION
INDIVIDUAL RETIREMENT ACCOUNTS.—If,
with respect to an individual for any tax-
able year—
‘‘(I) the aggregate distributions
to which clauses (i) and (ii) and sec-
tion 530(d)(2)(A) apply, exceed
‘‘(II) the total amount of quali-
fied higher education expenses other-
wise taken into account under clauses
(i) and (ii) (after the application of
clause (iv)) for such year,
the taxpayer shall allocate such expenses
among such distributions for purposes of
determining the amount of the exclusion
under clauses (i) and (ii) and section
530(d)(2)(A).’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 135(d)(2)(B) of such Code is
amended by striking ‘‘the exclusion under sec-
tion 530(d)(2)’’ and inserting ‘‘the exclusions
under sections 529(c)(3)(B)(i) and 530(d)(2)’’.
(B) Section 221(e)(2)(A) of such Code is
amended by inserting ‘‘529,’’ after ‘‘135,’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2000.
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