‘‘(4) NONDISCRIMINATION
RULE
FOR
EM-
PLOYER
CONTRIBUTIONS.—Subsection (a)(9) shall 
only apply to contributions provided with respect to 
a highly compensated employee if such contributions 
meet the requirements of paragraph (2)(B). 
‘‘(5) INFLATION ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning in a calendar year after 
2016, the $100 amount contained in paragraph 
(3) shall be increased by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
year 2015’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
‘‘(B) ROUNDING.—Any increase deter-
mined under subparagraph (A) shall be rounded 
to the nearest multiple of $25.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made after De-
cember 31, 2016. 
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SEC. 3. TAX CREDIT FOR SMALL EMPLOYER COSTS OF ES-
TABLISHING DIRECT PAYROLL DEDUCTION 
INTO QUALIFIED TUITION PROGRAMS AND 
QUALIFIED ABLE PROGRAMS. 
(a) IN GENERAL.—Section 45E of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(f) APPLICATION TO PROGRAMS FOR PAYROLL DE-
DUCTION CONTRIBUTIONS TO QUALIFIED TUITION PRO-
GRAMS AND QUALIFIED ABLE PROGRAMS.—In the case 
of a qualified payroll deduction contribution program (as 
defined in section 132(o)(2)) established by an employer— 
‘‘(1) such program shall be treated as an eligi-
ble employer plan for purposes of this section, 
‘‘(2) this section (including the limitation of 
subsection (b)) shall be applied separately with re-
spect to such programs and any other eligible em-
ployer plans of the employer, and 
‘‘(3) subsection (d)(1)(A)(ii) shall be applied by 
substituting ‘education’ for ‘retirement-related edu-
cation’.’’. 
(b) CLERICAL AMENDMENTS.— 
(1) The heading for section 45E of such Code 
is amended by striking ‘‘PENSION’’. 
(2) The table of sections for subpart D of part 
IV of subchapter A of chapter 1 of such Code is 
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amended by striking the item relating to section 45E 
and inserting the following new item: 
‘‘Sec. 45E. Small employer plan startup costs.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to costs paid or incurred in taxable 
years beginning after the date of the enactment of this 
Act. 
SEC. 4. EXEMPTIONS FROM ADDITIONAL TAX FOR CERTAIN 
DISTRIBUTIONS FROM QUALIFIED TUITION 
PROGRAMS. 
(a) IN GENERAL.—Section 529(c)(6) of the Internal 
Revenue Code of 1986 is amended by striking the last sen-
tence and inserting the following: ‘‘This paragraph shall 
not apply to the extent that— 
‘‘(A) a payment or distribution is contrib-
uted to an individual retirement plan of the ac-
count owner or the designated beneficiary with 
respect to the calendar year in which the pay-
ment or distribution is received, 
‘‘(B) a payment or distribution is used 
(within 90 days of the payment or distribution) 
to make a payment of interest or principal on 
a qualified education loan (as defined in section 
222(d)(1)) on behalf of the designated bene-
ficiary or a member of the family of such des-
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ignated beneficiary within the meaning of sec-
tion 529(e)(2)), or 
‘‘(C) the recipient of a payment or dis-
tribution makes (within 90 days of the receipt 
of the payment or distribution) a contribution 
to 
an 
organization 
described 
in 
section 
170(b)(1)(A) (other than any organization de-
scribed in section 509(a)(3) or any fund or ac-
count described in section 4966(d)(2)), but only 
if— 
‘‘(i) a deduction for the entire pay-
ment or distribution is allowable under sec-
tion 170, and 
‘‘(ii) the total payments and distribu-
tions taken into account under this sub-
paragraph with respect to such recipient 
for any taxable year does not exceed 
$1,000.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distributions after the date of 
the enactment of this Act. 
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SEC. 5. CLARIFICATION REGARDING INVESTMENT DIREC-
TION IN QUALIFIED TUITION PROGRAMS AND 
QUALIFIED ABLE PROGRAMS. 
(a) INVESTMENT DIRECTION IN QUALIFIED TUITION 
PROGRAMS.—Paragraph (4) of section 529(b) of the In-
ternal Revenue Code of 1986 is amended by adding at the 
end the following: ‘‘For purposes of this paragraph, rebal-
ancing investments among broad-based investment strate-
gies established under the program shall not be treated 
as investment direction by a contributor or designated 
beneficiary unless the specific investments within those 
broad-based strategies are directed by the contributor or 
designated beneficiary.’’. 
(b) INVESTMENT DIRECTION IN QUALIFIED ABLE 
PROGRAMS.—Paragraph (4) of section 529A(b) of such 
Code is amended by adding at the end the following: ‘‘For 
purposes of this paragraph, rebalancing investments 
among broad-based investment strategies established 
under the program shall not be treated as investment di-
rection by a designated beneficiary unless the specific in-
vestments within those broad-based strategies are directed 
by the designated beneficiary.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to calendar years be-
ginning after the date of the enactment of this Act. 
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SEC. 6. ROLLOVERS BETWEEN QUALIFIED TUITION PRO-
GRAMS AND QUALIFIED ABLE PROGRAMS. 
(a) ROLLOVERS FROM QUALIFIED TUITION PRO-
GRAMS TO QUALIFIED ABLE PROGRAMS.—Clause (i) of 
section 529(c)(3)(C) of the Internal Revenue Code of 1986 
is amended by striking ‘‘or’’ at the end of subclause (I), 
by striking the period at the end of subclause (II) and 
inserting ‘‘, or’’, and by adding at the end the following 
new subclause: 
‘‘(III) to an ABLE account (as 
defined in section 529A(e)(6)) of the 
designated beneficiary or a member of 
the family of the designated bene-
ficiary. 
Subclause (III) shall not apply to so much 
of a distribution which, when added to all 
other contributions made to the ABLE ac-
count for the taxable year, exceeds the lim-
itation under section 529A(b)(2)(B).’’. 
(b) ROLLOVERS FROM QUALIFIED ABLE PROGRAMS 
TO QUALIFIED TUITION PROGRAMS.—Clause (i) of section 
529A(c)(1)(C) of such Code is amended— 
(1) by striking ‘‘such payment or distribution, 
into another’’ and inserting ‘‘such payment or dis-
tribution— 
‘‘(I) into another’’; 
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(2) by striking the period at the end and insert-
ing ‘‘, or’’, and 
(3) by adding at the end the following new sub-
clause: 
‘‘(II) to a qualified tuition pro-
gram (as described in section 529) for 
the benefit of the same designated 
beneficiary or a member of the family 
of such designated beneficiary.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distributions after the date of 
the enactment of this Act. 
Æ 
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