I 
113TH CONGRESS 
2D SESSION 
H. R. 5554 
To amend the Internal Revenue Code of 1986 to permit distributions from 
529 accounts for medical expenses of account owners who are veterans 
with disability ratings of greater than 50 percent. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 18, 2014 
Mr. BISHOP of New York (for himself and Mr. RANGEL) 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 
distributions from 529 accounts for medical expenses 
of account owners who are veterans with disability rat-
ings of greater than 50 percent. 
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 ‘‘Helping Wounded 
Warriors Cover Medical Expenses Act’’. 
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SEC. 2. DISTRIBUTIONS FROM 529 ACCOUNTS FOR MEDICAL 
EXPENSES OF ACCOUNT OWNERS WHO ARE 
VETERANS WITH DISABILITY RATINGS OF 
GREATER THAN 50 PERCENT. 
(a) EXEMPTION
FROM
529 PENALTY.—Section 
529(c)(6) of the Internal Revenue Code of 1986 is amend-
ed to read as follows: 
‘‘(6) ADDITIONAL TAX.— 
‘‘(A) IN GENERAL.—The tax imposed by 
section 530(d)(4) shall apply to any payment or 
distribution from a qualified tuition program in 
the same manner as such tax applies to a pay-
ment or distribution from a Coverdell education 
savings account. This paragraph shall not apply 
to any payment or distribution in any taxable 
year beginning before January 1, 2004, which 
is includible in gross income but used for quali-
fied higher education expenses of the designated 
beneficiary. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply to any payment or distribution 
from a qualified tuition program to the owner 
of an account under such program if— 
‘‘(i) at the time of such payment or 
distribution, the owner of such account is 
a veteran whom the Secretary of Veterans 
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Affairs determines has a service-connected 
disability rated at 50 percent or more, and 
‘‘(ii) in lieu of using such payment or 
distribution for qualified higher education 
expenses, such payment or distribution is 
used for medical care (as defined in section 
213(d)) for such owner. 
‘‘(C) COORDINATION
WITH
MEDICAL
EX-
PENSE
DEDUCTION.—For purposes of deter-
mining the amount of the deduction under sec-
tion 213, any payment or distribution to which 
subparagraph (B) applies shall not be treated 
as an expense paid for medical care.’’. 
(b) EXCLUSION FROM INCOME.—Section 72(e)(6) of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(6) EXTENSION
OF
PARAGRAPH (2)(B) TO 
QUALIFIED
TUITION
PROGRAMS
AND
COVERDELL 
EDUCATION SAVINGS ACCOUNTS.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of this subsection, paragraph 
(2)(B) shall apply to amounts received under a 
qualified tuition program (as defined in section 
529(b)) or under a Coverdell education savings 
account (as defined in section 530(b)). The rule 
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of paragraph (8)(B) shall apply for purposes of 
this paragraph. 
‘‘(B) EXCEPTION.—In the case of an 
amount received under a qualified tuition pro-
gram (as defined in section 529(b)) which is 
not subject to the penalty under subparagraph 
(A) of section 529(c)(6) by reason of subpara-
graph (B) thereof— 
‘‘(i) subparagraph (A) of this para-
graph shall not apply, and 
‘‘(ii) the amount received which, but 
for this subparagraph, would be treated as 
income on the contract shall be treated as 
investment in the contract.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payments and distributions after 
the date of the enactment of this Act. 
Æ 
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