HR 529 RDS
SECTION 1. FINDINGS AND PURPOSE. 
(a) FINDINGS.—Congress finds the following: 
(1) When the Economic Growth and Tax Relief 
Reconciliation Act of 2001 became law, the tax 
treatment of section 529 college savings plans was 
changed so that qualified distributions were no 
longer taxed as income. The favorable tax treatment 
of college savings plans was made permanent with 
the passage of the Pension Protection Act of 2006. 
(2) Section 529 college savings plans empower 
middle-class families to accumulate savings to offset 
the rising costs of attending college. 
(3) The latest data from the College Savings 
Plan Network shows that there are 11.83 million 
529 accounts open throughout all 50 states, which 
represent $244.5 billion in total assets. The average 
529 account size is $20,671. 
(4) States that sponsor 529 college savings 
plans have taken steps to ensure these plans are a 
tool that all families can use to save for college, in-
cluding setting minimum contributions as low as $25 
per month to encourage participation by families of 
all income levels. 
(5) The President’s fiscal year 2016 Budget 
proposes raising taxes by taxing certain future dis-
tributions made from 529 college savings plans. 
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(6) The tax proposed by the President would 
discourage the use of 529 college savings plans, re-
quiring families and students to take on more debt. 
(7) Purchase of a computer represents a signifi-
cant higher education expense and therefore should 
be eligible for qualified distributions under 529 col-
lege savings plans. 
(b) PURPOSE.—It is the purpose of this Act to— 
(1) enact policies that strengthen 529 college 
savings plans; and 
(2) make 529 plans more modern, consumer- 
friendly, and responsive to the realities faced by stu-
dents today. 
SEC. 2. COMPUTER TECHNOLOGY AND EQUIPMENT PERMA-
NENTLY ALLOWED AS A QUALIFIED HIGHER 
EDUCATION EXPENSE FOR SECTION 529 AC-
COUNTS. 
(a) IN GENERAL.—Section 529(e)(3)(A)(iii) of the 
Internal Revenue Code of 1986 is amended to read as fol-
lows: 
‘‘(iii) expenses for the purchase of 
computer or peripheral equipment (as de-
fined in section 168(i)(2)(B)), computer 
software 
(as 
defined 
in 
section 
197(e)(3)(B)), or Internet access and re-
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lated services, if such equipment, software, 
or services are to be used primarily by the 
beneficiary during any of the years the 
beneficiary is enrolled at an eligible edu-
cational institution.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
SEC. 3. ELIMINATION OF DISTRIBUTION AGGREGATION RE-
QUIREMENTS. 
(a) IN GENERAL.—Section 529(c)(3) of the Internal 
Revenue Code of 1986 is amended by striking subpara-
graph (D). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to distributions after December 31, 
2014. 
SEC. 4. RECONTRIBUTION OF REFUNDED AMOUNTS. 
(a) IN GENERAL.—Section 529(c)(3) of the Internal 
Revenue Code of 1986, as amended by section 3, is 
amended by adding at the end the following new subpara-
graph: 
‘‘(D) SPECIAL RULE FOR CONTRIBUTIONS 
OF
REFUNDED
AMOUNTS.—In the case of a 
beneficiary who receives a refund of any quali-
fied higher education expenses from an eligible 
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educational institution, subparagraph (A) shall 
not apply to that portion of any distribution for 
the taxable year which is recontributed to a 
qualified tuition program of which such indi-
vidual is a beneficiary, but only to the extent 
such recontribution is made not later than 60 
days after the date of such refund and does not 
exceed the refunded amount.’’. 
(b) EFFECTIVE DATE.— 
(1) IN
GENERAL.—The amendment made by 
this section shall apply with respect to refunds of 
qualified higher education expenses after December 
31, 2014. 
(2) TRANSITION RULE.—In the case of a refund 
of qualified higher education expenses received after 
December 31, 2014, and before the date of the en-
actment of this Act, section 529(c)(3)(D) of the In-
ternal Revenue Code of 1986 (as added by this sec-
tion) shall be applied by substituting ‘‘not later than 
60 days after the date of the enactment of this 
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subparagraph’’ for ‘‘not later than 60 days after the 
date of such refund’’. 
Passed the House of Representatives February 25, 
2015. 
Attest: 
KAREN L. HAAS, 
Clerk. 
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