Help All Americans Save for College Act of 2017
This bill amends the Internal Revenue Code to modify the tax treatment of qualified tuition programs (known as 529 plans) and ABLE accounts. (Tax-favored ABLE [Achieving a Better Life Experience] accounts are designed to enable individuals with disabilities to save for and pay for disability-related expenses.)
The bill excludes employer contributions to an employee's 529 plan or ABLE account from the gross income of an individual, certain employment taxes, and taxes on self-employment earnings.
The exclusions are limited to the lesser of: (1) the compensation includible in the individual's gross income for the year, or (2) $5,000 ($10,000 in the case of a joint return) for each dependent of the taxpayer who is the designated beneficiary of a 529 plan.
The bill also allows an individual to deduct up to $5,000 of the aggregate contributions of the individual to a 529 plan and an ABLE account.
The bill revises the 10% additional tax for distributions from a 529 plan or an ABLE account that are not used for qualified purposes to change the rate to the greater of: (1) 10%, or (2) the highest rate of income tax applicable to the taxpayer.
[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3046 Introduced in House (IH)]
<DOC>
115th CONGRESS
1st Session
H. R. 3046
To amend the Internal Revenue Code of 1986 to exclude employer
contributions to 529 plans from gross income and employment taxes and
to allow a deduction for individual contributions to such plans.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 23, 2017
Mr. Poliquin (for himself, Mr. O'Halleran, Mr. Sensenbrenner, and Mr.
Rodney Davis of Illinois) 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 exclude employer
contributions to 529 plans from gross income and employment taxes and
to allow a deduction for individual contributions to such plans.
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 ``Help All Americans Save for College
Act of 2017''.
SEC. 2. TAX TREATMENT OF CONTRIBUTIONS TO 529 PLANS.
(a) Exclusion From Gross Income for Employer Contributions.--
(1) In general.--Part III of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by inserting after
section 139F the following new section:
``SEC. 139G. EMPLOYER CONTRIBUTIONS TO 529 PLAN OR ABLE ACCOUNT.
``(a) In General.--In the case of an individual who is a qualified
account owner, gross income shall not include the amount of any
contribution to such account during the taxable year by the employer of
the account owner.
``(b) Limitation.--The amount exempt from gross income by
subsection (a) for a taxable year shall not exceed the lesser of--
``(1) an amount equal to the compensation includible in the
individual's gross income for such taxable year, or
``(2) $5,000 ($10,000 in the case of a joint return) for
each dependent who of the taxpayer is the designated
beneficiary of an account under section 529.
``(c) Qualified Account Owner.--For purposes of this section, the
term `qualified account owner' means--
``(1) in the case of an account in connection with a
qualified tuition program, the account owner of an account of a
designated beneficiary under section 529, and
``(2) in the case of an ABLE account, the designated
beneficiary in connection with the ABLE account under section
529A(e)(3).''.
(2) Cafeteria plan does not include employer contributions
to 529 plans or able accounts.--Section 125(d)(2) of such Code
is amended by adding at the end the following:
``(E) Exception for contributions to 529 plan and
able accounts.--Subparagraph (A) shall not apply to a
plan to the extent of amounts which a covered employee
may elect to have the employer pay as contributions to
an account under section 529 or 529A.''.
(3) Clerical amendment.--The table of sections for part III
of subchapter B of chapter 1 of such Code is amended by
inserting after the item relating to section 139F the following
new item:
``Sec. 139G. Employer contributions to 529 plan or ABLE account.''.
(b) Federal Insurance Contributions.--
(1) Wages.--Section 3121(a) of such Code is amended by
striking ``or'' at the end of paragraph (22), by striking the
period at the end of paragraph (23) and inserting ``; or'', and
by inserting after paragraph (23) the following:
``(24) the amount of any contribution made to or on behalf
of an employee if at the time of such contribution it is
reasonable to believe that the employee will be able to exclude
such contribution from income under section 139G.''.
(2) Net earnings from self-employment.--Section 1402(a) of
such Code is amended by striking ``and'' at the end of
paragraph (16), by striking the period at the end of paragraph
(17) and inserting ``; and'', and inserting after paragraph
(17) the following:
``(18) there shall be excluded any contribution made to or
on behalf of an employee that is not includible in gross income
of the employee under section 139G.''.
(3) Conforming amendments to social security act.--
(A) Wages.--Section 209(a) of the Social Security
Act (42 U.S.C. 409(a)) is amended by striking ``or'' at
the end of paragraph (19) and inserting a semicolon, by
striking the period at the end of paragraph (20) and
inserting ``; or'', and by inserting after paragraph
(20) the following:
``(21) The amount of any contribution made to or on behalf
of an employee that is not includible in gross income of the
employee under section 139G of the Internal Revenue Code of
1986.''.
(B) Net earnings from self-employment.--Section
211(a) of the Social Security Act (42 U.S.C. 411(a)) is
amended by striking ``and'' at the end of paragraph
(15), by striking the period at the end of paragraph
(16) and inserting ``; and'', and inserting after
paragraph (16) the following:
``(17) There shall be excluded any contribution made to or
on behalf of an employee that is not includible in gross income
of the employee under section 139G of the Internal Revenue Code
of 1986.''.
(c) Railroad Retirement.--Section 3231(e) of such Code is amended
by adding at the end the following:
``(13) Employer contributions to 529 plan or able
account.--The term compensation shall not include any
contribution made to or on behalf of an employee that is not
includible in gross income of the employee under section
139G.''.
(d) Deduction for Individual Contributions.--
(1) In general.--Part VII of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by redesignating
section 224 as section 225 and by inserting after section 223
the following new section:
``SEC. 224. CONTRIBUTIONS TO 529 PLANS AND ABLE ACCOUNTS.
``(a) Allowance of Deduction.--In the case of an individual, there
shall be allowed as a deduction for the taxable year an amount equal to
the sum of--
``(1) the aggregate contributions made by such individual
to qualified tuition programs (as defined in section 529)
during such taxable year, and
``(2) the aggregate contributions made by such individual
to ABLE accounts (as defined in section 529A) during such
taxable year.
``(b) Limitation.--The amount allowed as a deduction by subsection
(a) for a taxable year shall not exceed $5,000.''.
(2) Clerical amendment.--The table of sections for part VII
of subchapter B of chapter 1 of such Code is amended by
redesignating the item relating to section 224 as an item
relating to section 225 and by inserting after the item
relating to section 223 the following new item:
``Sec. 224. Contributions to 529 plans and ABLE accounts.''.
(e) Effective Date.--The amendments made by this section shall
apply to contributions made during taxable years beginning after the
date of the enactment of this Act.
SEC. 3. ADDITIONAL TAX FOR DISTRIBUTIONS NOT USED FOR QUALIFIED
PURPOSES.
(a) Qualified Tuition Programs.--
(1) In general.--The first sentence of section 529(c)(6) of
the Internal Revenue Code of 1986 is amended by striking the
period at the end and inserting ``, except that the rate of
such tax shall be determined under subparagraph (B) of this
paragraph.''.
(2) Rate.--Paragraph (6) of section 529(c) of such Code, as
amended by subsection (a), is amended--
(A) by striking ``The tax'' and inserting
``(A) In general.--The tax'', and
(B) by adding at the end the following:
``(B) Rate.--For purposes of subparagraph (A), the
tax rate determined under this subparagraph is the
greater of--
``(i) 10 percent, and
``(ii) the highest rate of income tax
applicable to such person under this title.''.
(b) Qualified ABLE Programs.--
(1) In general.--Subparagraph (A) of section 529A(c)(3) of
the Internal Revenue Code of 1986 is amended by striking ``10
percent'' and inserting ``the applicable percentage''.
(2) Applicable percentage.--Paragraph (3) of section
529A(c) of such Code is amended by adding at the end the
following:
``(D) Applicable percentage.--For purposes of this
paragraph, the term `applicable percentage' means the
greater of--
``(i) 10 percent, and
``(ii) the highest rate of income tax
applicable to such person under this title.''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions made during taxable years beginning after the
date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Referred to the Subcommittee on Trade.
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