Title: To amend the Internal Revenue Code of 1986 to allow qualified education loan repayments from section 529 plans.
Policy area: Taxation

Summary:
This bill amends the Internal Revenue Code to allow qualified tuition programs (known as 529 plans) to be used to repay qualified education loans. The bill allows up to $10,000 in distributions from a 529 plan to be used to pay the principal or interest on a qualified education loan of the designated beneficiary or a sibling of the beneficiary.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6767 Introduced in House (IH)]

<DOC>






115th CONGRESS
  2d Session
                                H. R. 6767

To amend the Internal Revenue Code of 1986 to allow qualified education 
                loan repayments from section 529 plans.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 10, 2018

 Mr. Paulsen 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 qualified education 
                loan repayments from section 529 plans.

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

SECTION 1. QUALIFIED EDUCATION LOAN REPAYMENTS ALLOWED FROM SECTION 529 
              PLANS.

    (a) In General.--Section 529(c) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(8) Treatment of qualified education loan repayments.--
                    ``(A) In general.--Any reference in this subsection 
                to the term `qualified higher education expense' shall 
                include a reference to amounts paid as principal or 
                interest on any qualified education loan (as defined in 
                section 221(d)) of the designated beneficiary or a 
                sibling of the designated beneficiary.
                    ``(B) Limitation.--The amount of distributions 
                treated as a qualified higher education expense under 
                this paragraph with respect to the loans of any 
                individual shall not exceed $10,000 (reduced by the 
                amount of distributions so treated for all prior 
                taxable years).
                    ``(C) Special rules for siblings of the designated 
                beneficiary.--
                            ``(i) Separate accounting.--For purposes of 
                        subparagraph (B) and subsection (d), amounts 
                        treated as a qualified higher education expense 
                        with respect to the loans of a sibling of the 
                        designated beneficiary shall be taken into 
                        account with respect to such sibling and not 
                        with respect to such designated beneficiary.
                            ``(ii) Sibling defined.--For purposes of 
                        this paragraph, the term `sibling' means an 
                        individual who bears a relationship to the 
                        designated beneficiary which is described in 
                        section 152(d)(2)(B).''.
    (b) Coordination With Deduction for Student Loan Interest.--Section 
221(e)(1) of such Code is amended by adding at the end the following: 
``The deduction otherwise allowable under subsection (a) (prior to the 
application of subsection (b)) to the taxpayer for any taxable year 
shall be reduced (but not below zero) by so much of the distributions 
treated as a qualified higher education expense under section 529(c)(8) 
with respect to loans of the taxpayer as would be includible in gross 
income under section 529(c)(3)(A) for such taxable year but for such 
treatment.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made after the date of the enactment of this 
Act.
                                 <all>