I
105TH CONGRESS
1ST SESSION
H. R. 2646
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
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 In-
ternal Revenue Code of 1986 is amended to read as
follows:
‘‘(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 cer-
tificates, or to make contributions to an ac-
count, under a qualified State tuition program
(as defined in section 529(b)) for the benefit of
the beneficiary 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 el-
ementary and secondary education expenses’
means tuition, fees, tutoring, special needs serv-
ices, books, supplies, equipment, transportation,
and supplementary expenses required for the
enrollment or attendance of the designated ben-
eficiary of the trust at a public, private, or reli-
gious school.
‘‘(B) 
SPECIAL
RULE
FOR
HOMESCHOOLING.—Such term shall include ex-
penses described in subparagraph (A) required
for education provided for homeschooling if the
requirements of any applicable State or local
law are met with respect to such education.
‘‘(C) SCHOOL.—The term ‘school’ means
any school which provides elementary education
or secondary education (through grade 12), as
determined under State law.’’
(3) CONFORMING
AMENDMENTS.—Subsections
(b)(1) and (d)(2) of section 530 of such Code are
each amended by striking ‘‘higher’’ each place it ap-
pears in the text and heading thereof.
(b) INCREASE
IN MAXIMUM ANNUAL CONTRIBU-
TIONS.—
(1) IN GENERAL.—Section 530(b)(1)(A)(iii) of
the Internal Revenue Code of 1986 is amended by
striking ‘‘$500’’ and inserting ‘‘$2,500’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 530(d)(4)(C) of such Code is
amended by striking ‘‘$500’’ and inserting
‘‘$2,500’’.
(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 add-
ing 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
Relief Act of 1997.
(2) REFERENCES.—Any reference in this sec-
tion 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 Inter-
nal Revenue, 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.—