SEC. 2. COMPUTER TECHNOLOGY AND EQUIPMENT AL-
LOWED AS A QUALIFIED HIGHER EDUCATION 
EXPENSE FOR SECTION 529 ACCOUNTS. 
(a) IN GENERAL.—Section 529(e)(3)(A) of the Inter-
nal Revenue Code of 1986 is amended by striking ‘‘and’’ 
at the end of clause (i), by striking the period at the end 
of clause (ii), and by adding at the end the following: 
‘‘(iii) expenses paid or incurred for 
the purchase of any computer technology 
or equipment (as defined in section 
170(e)(6)(F)(i)) or Internet access and re-
lated services, if such technology, equip-
ment, or services are to be used primarily 
by the designated beneficiary while enrolled 
at an eligible educational institution. 
Clause (iii) shall not include expenses for com-
puter software designed for sports, games, or 
hobbies unless the software is predominantly 
educational in nature.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenses paid or incurred after 
December 31, 2010, in taxable years ending after such 
date. 
SEC. 3. CREDIT FOR CONTRIBUTIONS TO 529 PLANS. 
(a) IN GENERAL.—Subsection (d) of section 25B of 
the Internal Revenue Code of 1986 (relating to elective 
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deferrals and IRA contributions by certain individuals) is 
amended by redesignating paragraph (2) as paragraph (3) 
and by inserting after paragraph (1) the following new 
paragraph: 
‘‘(2) CONTRIBUTIONS TO QUALIFIED TUITION 
PROGRAMS.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
savings contribution’ includes the amount of 
any purchase or contribution described in para-
graph (1)(A) of section 529(b) to a qualified 
tuition program (as defined in such section) 
if— 
‘‘(i) the taxpayer has the power to au-
thorize distributions and otherwise admin-
ister the account, and 
‘‘(ii) the designated beneficiary of 
such purchase or contribution is the tax-
payer, the taxpayer’s spouse, or an indi-
vidual with respect to whom the taxpayer 
is allowed a deduction under section 151. 
‘‘(B) LIMITATION
BASED
ON
COMPENSA-
TION.—The amount treated as a qualified sav-
ings contribution by reason of subparagraph 
(A) for any taxable year shall not exceed the 
sum of— 
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‘‘(i) the compensation (as defined in 
section 219(f)(1)) includible in the tax-
payer’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 deter-
mining the applicable percentage under sub-
section (b) which applies with respect to the 
amount treated as a qualified savings contribu-
tion 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 re-
ceived during the taxable year (within the 
meaning of section 86), over 
‘‘(ii) the amount included in gross in-
come for such year under section 86.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 25B of such Code is amended by 
striking ‘‘qualified retirement savings’’ each place it 
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appears in the text and inserting ‘‘qualified sav-
ings’’. 
(2) The subsection heading for section 25B(d) 
of such Code is amended by striking ‘‘RETIRE-
MENT’’. 
(3) Subparagraph (A) of section 25B(d)(3) of 
such Code, as redesignated by subsection (a), is 
amended— 
(A) by striking ‘‘paragraph (1)’’ the first 
place it appears and inserting ‘‘paragraph (1) 
or (2)’’, and 
(B) by striking ‘‘paragraph (1)’’ the sec-
ond place it appears and inserting ‘‘paragraph 
(1), or (2), as the case may be,’’. 
(4) The heading for section 25B of such Code 
is amended by striking ‘‘AND
IRA
CONTRIBU-
TIONS’’ and inserting ‘‘, IRA
CONTRIBUTIONS, 
AND QUALIFIED TUITION PROGRAM CONTRIBU-
TIONS’’. 
(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.’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made after De-
cember 31, 2010, in taxable years ending after such date. 
SEC. 4. INVESTMENT DIRECTION UNDER QUALIFIED TUI-
TION PROGRAMS. 
(a) IN GENERAL.—Paragraph (4) of section 529(b) 
of the Internal Revenue Code of 1986 (relating to invest-
ment direction) is amended by striking the period at the 
end and inserting ‘‘more frequently than 4 times per cal-
endar year.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years beginning after December 
31, 2010. 
SEC. 5. EXCLUSION FROM GROSS INCOME FOR EMPLOYER 
CONTRIBUTIONS 
TO 
QUALIFIED 
TUITION 
PROGRAMS. 
(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. EMPLOYER CONTRIBUTIONS TO QUALIFIED 
TUITION PROGRAMS. 
‘‘(a) IN GENERAL.—Gross income of an employee 
does not include amounts paid by the employer as con-
tributions to a qualified tuition program held by the em-
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ployee or spouse of the employee if the contributions are 
made pursuant to a program which is described in sub-
section (b). 
‘‘(b) MAXIMUM EXCLUSION.—The amount excluded 
from the gross income of an employee under this section 
for the taxable year shall not exceed $600. 
‘‘(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 sec-
tion 151, and 
‘‘(ii) has the power to authorize dis-
tributions 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). 
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‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) QUALIFIED TUITION PROGRAM.—The term 
‘qualified tuition program’ means a qualified tuition 
program as defined in section 529(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. 
‘‘(e) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning in a calendar year after 2011, the 
$600 amount contained in subsection (b)(1) shall be 
increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 2010’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
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Any increase determined under the preceding sen-
tence shall be rounded to the nearest multiple of 
$50. 
‘‘(f) 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) 
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. 
(2) Section 132(j)(8) of such Code is amended 
by striking ‘‘section 127’’ and inserting ‘‘section 127 
or 127A’’. 
(3) Section 1397(a)(2)(A) of such Code is 
amended by inserting at the end the following new 
clause: 
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‘‘(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.’’. 
(4) Section 209(a)(15) of the Social Security 
Act (42 U.S.C. 409(a)(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. Employer contributions to qualified tuition programs.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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