Union Calendar No. 194
105TH CONGRESS
1ST SESSION
H. R. 2646
[Report No. 105–332]
A BILL
To amend the Internal Revenue Code of 1986 to
allow tax-free expenditures from education indi-
vidual retirement accounts for elementary and
secondary school expenses, to increase the maxi-
mum annual amount of contributions to such ac-
counts, and for other purposes.
OCTOBER 21, 1997
Reported with an amendment, committed to the Commit-
tee of the Whole House on the State of the Union, and
ordered to be printed
IB
Union Calendar No. 194
105TH CONGRESS
1ST SESSION
H. R. 2646
[Report No. 105–332]
To amend the Internal Revenue Code of 1986 to allow tax-free expenditures
from education individual retirement accounts for elementary and second-
ary school expenses, to increase the maximum annual amount of contribu-
tions to such accounts, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 9, 1997
Mr. ARCHER (for himself and Mr. GINGRICH) introduced the following bill;
which was referred to the Committee on Ways and Means
OCTOBER 21, 1997
Additional sponsors: Mr. ARMEY, Mr. DELAY, Mr. BOEHNER, Mr. BUNNING,
Mr. CHRISTENSEN, Mr. COLLINS, Ms. DUNN, Mr. ENSIGN, Mr.
HAYWORTH, Mr. HERGER, Mr. MCCRERY, Mr. WELLER, Mr. LINDER,
Mr. BLILEY, Mr. INGLIS of South Carolina, Mr. HOEKSTRA, Mr. GREEN-
WOOD, Mr. SOUDER, Mr. PARKER, Mr. MILLER of Florida, Mr. RILEY,
Mr. SNOWBARGER, Mr. STEARNS, Mr. CHABOT, Mrs. EMERSON, Mr.
POMBO, Mr. BACHUS, Mr. EHLERS, Mr. TALENT, Mr. NUSSLE, Ms.
GRANGER, Mr. GOODLING, Ms. PRYCE of Ohio, Mr. NEUMANN, Mr.
HULSHOF, Mr. FLAKE, Mr. KASICH, and Mr. LIPINSKI
OCTOBER 21, 1997
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on October 9, 1997]
A BILL
To amend the Internal Revenue Code of 1986 to allow tax-
free expenditures from education individual retirement
accounts for elementary and secondary school expenses,
to increase the maximum annual amount of contributions
to such accounts, and for other purposes.
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 ‘‘Education Savings Act
for Public and Private Schools’’.
SEC. 2. MODIFICATIONS TO EDUCATION INDIVIDUAL RE-
TIREMENT ACCOUNTS.
(a) TAX-FREE EXPENDITURES FOR ELEMENTARY AND
SECONDARY SCHOOL EXPENSES.—
(1) IN GENERAL.—Section 530(b)(2) of the Inter-
nal Revenue Code of 1986 is amended to read as fol-
lows:
‘‘(2) QUALIFIED EDUCATION EXPENSES.—
‘‘(A) IN
GENERAL.—The term ‘qualified
education expenses’ means—
‘‘(i) qualified higher education ex-
penses (as defined in section 529(e)(3)), and
‘‘(ii) qualified elementary and second-
ary education expenses (as defined in para-
graph (4)).
Such expenses shall be reduced as provided in
section 25A(g)(2).
‘‘(B) QUALIFIED
STATE
TUITION
PRO-
GRAMS.—Such term shall include amounts paid
or incurred to purchase tuition credits or certifi-
cates, or to make contributions to an account,
under a qualified State tuition program (as de-
fined in section 529(b)) for the benefit of the ben-
eficiary of the account.’’
(2) QUALIFIED
ELEMENTARY
AND
SECONDARY
EDUCATION EXPENSES.—Section 530(b) of such Code
is amended by adding at the end the following new
paragraph:
‘‘(4) QUALIFIED ELEMENTARY AND SECONDARY
EDUCATION EXPENSES.—
‘‘(A) IN GENERAL.—The term ‘qualified ele-
mentary and secondary education expenses’
means tuition, fees, tutoring, special needs serv-
ices, books, supplies, computer equipment (in-
cluding related software and services) and other
equipment, transportation, and supplementary
expenses required for the enrollment or attend-
(B) Section 4973(e)(1)(A) of such Code is
amended by striking ‘‘$500’’ and inserting
‘‘$2,500’’.
(c) WAIVER
OF AGE LIMITATIONS
FOR CHILDREN
WITH SPECIAL NEEDS.—Paragraph (1) of section 530(b)
of the Internal Revenue Code of 1986 is amended by adding
at the end the following flush sentence:
‘‘The age limitations in the preceding sentence shall
not apply to any designated beneficiary with special
needs (as determined under regulations prescribed by
the Secretary).’’
(d) CORPORATIONS PERMITTED TO CONTRIBUTE TO
ACCOUNTS.—Paragraph (1) of section 530(c) of the Inter-
nal Revenue Code of 1986 is amended by striking ‘‘The
maximum amount which a contributor’’ and inserting ‘‘In
the case of a contributor who is an individual, the maxi-
mum amount the contributor’’.
(e) EFFECTIVE DATE; REFERENCES.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall take effect as if included in the
amendments made by section 213 of the Taxpayer Re-
lief Act of 1997.
(2) REFERENCES.—Any reference in this section
to any section of the Internal Revenue Code of 1986
shall be a reference to such section as added by the
Taxpayer Relief Act of 1997.
SEC. 3. OVERRULING OF SCHMIDT BAKING COMPANY CASE.
(a) IN GENERAL.—The Internal Revenue Code of 1986
shall be applied (other than with respect to severance pay)
without regard to the result reached in the case of Schmidt
Baking Company, Inc. v. Commissioner of Internal Reve-
nue, 107 T.C. 271 (1996).
(b) REGULATIONS.—The Secretary of the Treasury or
the Secretary’s delegate shall prescribe regulations to reflect
subsection (a).
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Subsections (a) and (b) shall
apply to taxable years ending after October 8, 1997.
(2) CHANGE IN METHOD OF ACCOUNTING.—In
the case of any taxpayer required by this section to
change its method of accounting for its first taxable
year ending after October 8, 1997—
(A) such change shall be treated as initiated
by the taxpayer,
(B) such change shall be treated as made
with the consent of the Secretary of the Treasury,
and
(C) the net amount of the adjustments re-
quired to be taken into account by the taxpayer
under section 481 of the Internal Revenue Code
of 1986 shall be taken into account in such first
taxable year.