529 Expansion and Modernization Act of 2019

Bill: 116-s-220
Sponsor: full_name: Sen. Gardner, Cory [R-CO]
Introduced: 2019-01-24
Policy area: Taxation
Subjects: Bank accounts, deposits, capital

Employee benefits and pensions

Employment and training programs

Income tax deferral

Income tax exclusion

Inflation and prices

Preschool education

Student aid and college costs

Vocational and technical education

Wages and earnings
Latest action: action_date: 2019-01-24
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2019-01-24
action_desc: Introduced in Senate
text: <p><b>529 Expansion and Modernization Act of 2019</b></p> <p>This bill allows tax-exempt distributions from qualified tuition programs (known as 529 plans) to be used for</p> <ul> <li> apprenticeship programs, </li> <li> early education expenses for children under the age of 5, </li> <li> career and technical education programs, and </li> <li> industry intermediary education programs.</li> </ul> <p>The bill also allows employers to make contributions to an employee's 529 plan as a fringe benefit that is excluded from the gross income of the employee. The contributions per employee may not exceed $500 per year (adjusted for inflation after 2020) and must be made in connection with a payroll deduction contribution program.</p>

tv_txt: II 116th CONGRESS 1st Session S. 220 IN THE SENATE OF THE UNITED STATES January 24, 2019 Mr. Gardner introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue 1986 to provide for distributions from 529 programs to pay apprenticeship and qualified early education expenses, and for other purposes.

1. Short title This Act may be cited as the 529 Expansion and Modernization Act of 2019 . 2. Expansion of 529 program expenses (a) Distributions from qualified tuition programs for certain expenses associated with registered apprenticeship programs Section 529(e)(3) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: (C) Certain expenses associated with registered apprenticeship programs The term qualified higher education expenses shall include books, supplies, and equipment required for the enrollment or attendance of a designated beneficiary in an apprenticeship program registered and certified with the Secretary of Labor under section 1 of the National Apprenticeship Act ( 29 U.S.C. 50 ). . (b) Special rules for 529 programs with respect to qualified early education expenses Section 529(e)(3) of the Internal Revenue Code of 1986, as amended by subsection (c), is amended by adding at the end the following new subparagraph: (D) Special rules permitting limited treatment of qualified early education expenses (i) In general Except as provided in clause (ii), qualified early education expenses shall be treated as qualified higher education expenses. (ii) Limitation If the aggregate amount of cash distributions from all qualified tuition programs described in subsection (b)(1)(A)(ii) with respect to a beneficiary for qualified early education expenses during any taxable year exceeds $10,000, such excess shall be treated for purposes of subsection (c)(3) as distributions in excess of the qualified higher education expenses of the beneficiary. (iii) Qualified early education expenses For purposes of this subparagraph, the term qualified early education expenses means expenses for providing educational and other care to a child under age 5 (including childcare provided before and after school), as determined under the law of the State, pursuant to attendance at a school or facility licensed in the State for such purpose. . (c) Career and technical education expenses Section 529(e)(3) of the Internal Revenue Code of 1986, as amended by the preceding subsections, is amended by adding at the end the following new subparagraph: (E) Treatment of career and technical education expenses Such term shall include expenses for books, supplies, and equipment required for enrollment or attendance of a designated beneficiary in a career and technical education program (as defined in section 3 of the Carl D. Perkins Career and Technical Education Act of 2006 ( 20 U.S.C. 2302 )). . (d) Industry intermediary education expenses Section 529(e)(3) of the Internal Revenue Code of 1986, as amended by the preceding subsections, is amended by adding at the end the following new subparagraph: (F) Treatment of industry intermediary education expenses (i) In general Such term shall include expenses for books, supplies, and equipment required for enrollment or attendance of a designated beneficiary in an industry intermediary education program. (ii) Industry intermediary education program For purposes of this subparagraph, the term industry intermediary education program means any entity that— (I) in order to accelerate apprenticeship program development and help establish new apprenticeship partnerships at the national, State, or regional level, serves as a conduit between an employer and an entity, such as an industry partner, the Department of Labor, or a State agency responsible for workforce development programs, (II) demonstrates a capacity to work with employers and other key partners to identify workforce trends and foster public-private funding to establish new apprenticeship programs, and (III) is a business, a consortium of businesses, a business-related nonprofit organization (including industry associations and business federations), a private organization functioning as a workforce intermediary for the express purpose of serving the needs of businesses (including community-based nonprofit service providers and industry-aligned training providers), or a consortium of any of such entities. . (e) Effective date The amendments made by this section shall apply to contributions made and distributions paid after December 31, 2019. 3. Employer contributions to qualified tuition programs (a) In general Subsection (a) of section 132 of the Internal Revenue Code of 1986 is amended by striking or at the end of paragraph (7), by striking the period at the end of paragraph (8) and inserting , or , and by adding at the end the following new paragraph: (9) qualified tuition program contributions. . (b) Qualified tuition program contributions Section 132 of the Internal Revenue Code of 1986 is amended by redesignating subsection (o) as subsection (p) and by inserting after subsection (n) the following new subsection: (o) Qualified tuition program contributions For purposes of this section— (1) In general The term qualified tuition program contributions means contributions (including matching contributions) made by an employer directly to a qualified tuition program (as described in section 529) designated by an employee if— (A) such contribution is made to an account under such program for which the designated beneficiary is the employee or a member of the family of the employee (within the meaning of section 529(e)(2)), and (B) such contribution is made in connection with a qualified payroll deduction contribution program established by the employer. (2) Qualified payroll deduction contribution program For purposes of this subsection, the term qualified payroll deduction contribution program means a program established by an employer— (A) under which employees may elect to make contributions to accounts described in paragraph (1)(A) which reduce the amount of wages received directly by such employee by the amount of such contribution, and (B) which is made available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees (as defined in section 414(q)). (3) Limitation on exclusion The amount of qualified tuition program contributions which may be excluded from gross income under subsection (a)(9) with respect to any employee shall not exceed $500 in any calendar year. (4) Inflation adjustment (A) In general In the case of any taxable year beginning in a calendar year after 2020, the $500 amount contained in paragraph (3) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2019 for calendar year 2016 in subparagraph (A)(ii) thereof. (B) Rounding Any increase determined under subparagraph (A) shall be rounded to the nearest multiple of $25. . (c) Effective date The amendments made by this section shall apply to contributions made after December 31, 2019.