Student Financial Readiness Act of 2006

Student Financial Readiness Act of 2006 - Amends the Internal Revenue Code to: (1) increase from $2,000 to $5,000 the annual contribution limit to Coverdell education savings accounts; (2) adjust such contribution limit for inflation after 2006; and (3) prohibit contributions by individuals whose modified adjusted gross income exceeds $150,000 ($300,000 for married couples filing joint tax returns).

[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5701 Introduced in House (IH)]








109th CONGRESS
  2d Session
                                H. R. 5701

   To amend the Internal Revenue Code of 1986 to increase the annual 
  contribution limit to Coverdell education savings accounts, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 28, 2006

 Mr. Knollenberg 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 increase the annual 
  contribution limit to Coverdell education savings accounts, and for 
                            other purposes.

    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 ``Student Financial Readiness Act of 
2006''.

SEC. 2. COVERDELL EDUCATION SAVINGS ACCOUNT IMPROVEMENTS.

    (a) Increase in Annual Contribution Limit to Coverdell Education 
Savings Accounts.--Clause (iii) of section 530(b)(1)(A) of the Internal 
Revenue Code of 1986 is amended by striking ``$2,000'' and inserting 
``$5,000''.
    (b) Contributions Not Allowed by Individuals Whose Adjusted Gross 
Income Exceeds Limitation.--So much of subsection (c) of section 530 of 
such Code as precedes paragraph (2) is amended to read as follows:
    ``(c) Contributions Not Allowed by Individuals Whose Adjusted Gross 
Income Exceeds Limitation.--
            ``(1) In general.--No contribution may be made to any 
        Coverdell education savings account by any individual during 
        the taxable year if the modified adjusted gross income of such 
        individual for such taxable year exceeds $150,000 (twice such 
        amount in the case of a joint return).''.
    (c) Cost-of-Living Adjustment.--Subsection (b) of section 530 of 
such Code is amended by adding at the end the following new paragraph:
            ``(5) Cost-of-living adjustment.--
                    ``(A) In general.--In the case of any taxable year 
                beginning in a calendar year after 2006, the dollar 
                amount contained in paragraph (1)(A)(iii) and 
                subsection (c)(1) shall both 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 2005' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any increase under subparagraph 
                (A) is not a multiple of $50, such increase shall be 
                rounded to the nearest multiple of $50.''.
    (d) Conforming Amendment.--Subparagraph (A) of section 4973(e)(1) 
of such Code is amended by striking ``$2,000'' and inserting ``the 
dollar amount in effect under section 530(b)(1)(A)(iii) for the taxable 
year''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.
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