I 
115TH CONGRESS 
1ST SESSION 
H. R. 529 
To amend the Internal Revenue Code of 1986 to make improvements in 
the rules related to qualified tuition programs and qualified ABLE programs. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 13, 2017 
Ms. JENKINS of Kansas (for herself and Mr. KIND) 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 make 
improvements in the rules related to qualified tuition 
programs and qualified ABLE programs. 
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 ‘‘529 and ABLE Ac-
count Improvement Act of 2017’’. 
SEC. 2. EMPLOYER CONTRIBUTIONS TO QUALIFIED TUI-
TION PROGRAMS AND QUALIFIED ABLE PRO-
GRAMS. 
(a) IN GENERAL.—Subsection (a) of section 132 of 
the Internal Revenue Code of 1986 is amended by striking 
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‘‘or’’ at the end of paragraph (7), by striking the period 
at the end of paragraph (8) and inserting ‘‘, or’’, and by 
adding at the end the following new paragraph: 
‘‘(9) qualified tuition program and qualified 
ABLE program contributions.’’. 
(b) QUALIFIED TUITION PROGRAM AND QUALIFIED 
ABLE PROGRAM CONTRIBUTIONS DEFINED.—Section 
132 of such Code is amended by redesignating subsection 
(o) as subsection (p) and inserting after subsection (n) 
the following new subsection: 
‘‘(o) QUALIFIED TUITION PROGRAM AND QUALIFIED 
ABLE PROGRAM CONTRIBUTIONS DEFINED.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified tuition and qualified ABLE 
program contributions’ means contributions (includ-
ing matching contributions) made by an employer 
directly to a qualified tuition program (as described 
in section 529) or qualified ABLE program (as de-
scribed in section 529A) designated by an employee 
if— 
‘‘(A) such contribution is made to an ac-
count under such program for which the des-
ignated beneficiary is the employee or a mem-
ber of the family of the employee (within the 
meaning of section 529(e)(2)), and 
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‘‘(B) such contribution is made in connec-
tion with a qualified payroll deduction contribu-
tion program established by the employer. 
‘‘(2) QUALIFIED
PAYROLL
DEDUCTION
CON-
TRIBUTION
PROGRAM.—For purposes of this sub-
section, the term ‘qualified payroll deduction con-
tribution program’ means a program established by 
an employer— 
‘‘(A) under which employees may elect to 
make contributions to accounts described in 
paragraph (1)(A) which reduce the amount of 
wages received directly by such employee by the 
amount of such contribution, and 
‘‘(B) which is made available on substan-
tially the same terms to each member of a 
group of employees which is defined under a 
reasonable classification set up by the employer 
which does not discriminate in favor of highly 
compensated employees (as defined in section 
414(q)). 
‘‘(3) LIMITATION ON EXCLUSION.—The amount 
of qualified tuition and qualified ABLE program 
contributions which may be excluded from gross in-
come under subsection (a)(9) with respect to any 
employee shall not exceed $100 in any calendar year. 
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‘‘(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 
2017, 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 2016’ 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 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-
ignated beneficiary within the meaning of sec-
tion 529(e)(2)), or 
‘‘(B) 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 
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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. 
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 
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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. 
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: 
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‘‘(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’’; 
(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 
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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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