College Savings Recovery Act.
Bill: S.4400 | Sponsor: Sen. Burr, Richard (R-NC)
Policy area: Taxation

Summary:
College Savings Recovery Act
This bill sets forth a special tax rule allowing a rollover to a Roth Individual Retirement Account (Roth IRA) from a long-term qualified tuition program (i.e., a 529 qualified tuition program) without penalty.

To amend the Internal Revenue Code of 1986 to allow for special 
   rollovers to Roth IRAs from long-term qualified tuition programs.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``College Savings Recovery Act.''

SEC. 2. SPECIAL ROLLOVER TO ROTH IRA FROM LONG-TERM QUALIFIED TUITION 
              PROGRAM.

    (a) In General.--Paragraph (3) of section 529(c) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(E) Special rollover to roth ira from long-term 
                qualified tuition program.--For purposes of this 
                section--
                            ``(i) In general.--In the case of a 
                        distribution from a qualified tuition program 
                        which has been maintained by an account owner 
                        in one or more qualified tuition programs for 
                        the 10-year period ending on the date of such 
                        distribution--
                                    ``(I) subparagraph (A) shall not 
                                apply to any portion of such 
                                distribution which is paid in a direct 
                                trustee-to-trustee transfer to a Roth 
                                IRA maintained for the benefit of such 
                                account owner or the designated 
                                beneficiary under such qualified 
                                tuition program, and
                                    ``(II) such portion shall be 
                                treated as a rollover contribution for 
                                purposes of section 408A(e).
                            ``(ii) Limitation.--Clause (i) shall only 
                        apply to so much of any distribution as does 
                        not exceed the lesser of--
                                    ``(I) the amount applicable to the 
                                account owner or the designated 
                                beneficiary, as the case may be, under 
                                section 408A(c)(2) for the taxable year 
                                (reduced by the amount of aggregate 
                                contributions made during the taxable 
                                year before the date of such 
                                distribution to all individual 
                                retirement plans maintained for the 
                                benefit of the account owner or 
                                designated beneficiary, as the case may 
                                be), or
                                    ``(II) the aggregate amount 
                                contributed to the program (and 
                                earnings attributable thereto) before 
                                the 5-year period ending on the date of 
                                the distribution.
                            ``(iii) Account owner.--For purposes of 
                        this subparagraph, the term `account owner' 
                        means the individual who established the 
                        qualified tuition program account under 
                        applicable State law.''.
    (b) Qualified Rollover Contribution.--Paragraph (1) of section 
408A(e) of such Code is amended--
            (1) by striking the period at the end of subparagraph (B) 
        and inserting ``, and'',
            (2) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) from a qualified tuition program to the 
                extent provided in section 529(c)(3)(E).'', and
            (3) by adding at the end the following new sentence: 
        ``Under regulations established by the Secretary, the earnings 
        and contributions of any qualified tuition program from which a 
        qualified rollover contribution is made under subparagraph (C) 
        shall be treated in the same manner as the earnings and 
        contributions of a Roth IRA from which a qualified rollover 
        contribution is made under subparagraph (A).''.
    (c) Reporting.--Section 529(d) of such Code is amended--
            (1) by striking ``Each officer'' and inserting the 
        following:
            ``(1) In general.--Each officer'',
            (2) by striking ``by this subsection'' and inserting ``by 
        this paragraph'', and
            (3) by adding at the end the following new paragraph:
            ``(2) Rollover distributions.--In the case of any 
        distribution described in subsection (c)(3)(A), the officer or 
        employee having control of the qualified tuition program (or 
        their designee) shall provide a report to the trustee of the 
        Roth IRA to which the distribution is made. Such report shall 
        be filed at such time and in such manner as the Secretary may 
        require and shall include information with respect to the 
        contributions, distributions, and earnings of the qualified 
        tuition program as of the date of the distribution described in 
        subsection (c)(3)(A), together with such other matters as the 
        Secretary may require.''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to distributions after December 31, 2022.
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