Education Savings Account and School Excellence Act of 1999 - Amends the Internal Revenue Code, with respect to education individual retirement accounts (IRAs), to: (1) permit distributions for qualified elementary and secondary education expenses, including home schooling expenses; and (2) increase (through December 31, 2002) the annual contribution limit from $500 to $2,000. Waives the beneficiary age limitation (18) for contributions on behalf of special needs beneficiaries. Permits corporations to contribute to education IRAs.
[Congressional Bills 106th Congress]
[From the U.S. Government Printing Office]
[S. 14 Introduced in Senate (IS)]
106th CONGRESS
1st Session
S. 14
To amend the Internal Revenue Code of 1986 to expand the use of
education individual retirement accounts, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 19, 1999
Mr. Coverdell (for himself and Mr. Torricelli) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to expand the use of
education individual retirement 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; AMENDMENT TO 1986 CODE.
(a) Short Title.--This Act may be cited as the ``Education Savings
Account and School Excellence Act of 1999''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this title an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 2. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS.
(a) Tax-Free Expenditures for Elementary and Secondary School
Expenses.--
(1) In general.--Section 530(b)(2) (defining qualified
higher education expenses) is amended to read as follows:
``(2) Qualified education expenses.--
``(A) In general.--The term `qualified education
expenses' means--
``(i) qualified higher education expenses
(as defined in section 529(e)(3)); and
``(ii) qualified elementary and secondary
education expenses (as defined in paragraph
(4)).
Such expenses shall be reduced as provided in section
25A(g)(2).
``(B) Qualified state tuition programs.--Such term
shall include amounts paid or incurred to purchase
tuition credits or certificates, or to make
contributions to an account, under a qualified State
tuition program (as defined in section 529(b)) for the
benefit of the beneficiary of the account.''.
(2) Qualified elementary and secondary education
expenses.--Section 530(b) (relating to definitions and special
rules) is amended by adding at the end the following new
paragraph:
``(4) Qualified elementary and secondary education
expenses.--
``(A) In general.--The term `qualified elementary
and secondary education expenses' means--
``(i) expenses for tuition, fees, academic
tutoring, special needs services, books,
supplies, computer equipment (including related
software and services), and other equipment
which are incurred in connection with the
enrollment or attendance of the designated
beneficiary of the trust as an elementary or
secondary school student at a public, private,
or religious school; or
``(ii) expenses for room and board,
uniforms, transportation, and supplementary
items and services (including extended day
programs) which are required or provided by a
public, private, or religious school in connection with such enrollment
or attendance.
``(B) Special rule for homeschooling.--Such term
shall include expenses described in subparagraph (A)(i)
in connection with education provided by homeschooling
if the requirements of any applicable State or local
law are met with respect to such education.
``(C) School.--The term `school' means any school
which provides elementary education or secondary
education (kindergarten through grade 12), as
determined under State law.''.
(3) Special rules for applying exclusion to elementary and
secondary expenses.--Section 530(d)(2) (relating to
distributions for qualified higher education expenses) is
amended by adding at the end the following new subparagraph:
``(E) Special rules for elementary and secondary
expenses.--
``(i) In general.--The aggregate amount of
qualified elementary and secondary education
expenses taken into account for purposes of
this paragraph with respect to any education
individual retirement account for all taxable
years shall not exceed the sum of the aggregate
contributions to such account for taxable years
beginning after December 31, 1998, and before
January 1, 2003, and earnings on such
contributions.
``(ii) Special operating rules.--For
purposes of clause (i)--
``(I) the trustee of an education
individual retirement account shall
keep separate accounts with respect to
contributions and earnings described in
clause (i); and
``(II) if there are distributions
in excess of qualified elementary and
secondary education expenses for any
taxable year, such excess distributions
shall be allocated first to
contributions and earnings not
described in clause (i).''.
(4) Conforming amendments.--Subsections (b)(1) and (d)(2)
of section 530 are each amended by striking ``higher'' each
place it appears in the text and heading thereof.
(b) Maximum Annual Contributions.--
(1) In general.--Section 530(b)(1)(A)(iii) (defining
education individual retirement account) is amended by striking
``$500'' and inserting ``the contribution limit for such
taxable year''.
(2) Contribution limit.--Section 530(b) (relating to
definitions and special rules), as amended by subsection
(a)(2), is amended by adding at the end the following new
paragraph:
``(5) Contribution limit.--The term `contribution limit'
means $500 ($2,000 in the case of any taxable year beginning
after December 31, 1998, and ending before January 1, 2003).''.
(3) Conforming amendment.--Section 4973(e)(1)(A) is amended
by striking ``$500'' and inserting ``the contribution limit (as
defined in section 530(b)(5)) for such taxable year''.
(c) Waiver of Age Limitations for Children With Special Needs.--
Section 530(b)(1) (defining education individual retirement account) is
amended by adding at the end the following flush sentence:
``The age limitations in the preceding sentence shall not apply
to any designated beneficiary with special needs (as determined
under regulations prescribed by the Secretary).''.
(d) Corporations Permitted To Contribute to Accounts.--Section
530(c)(1) (relating to reduction in permitted contributions based on
adjusted gross income) is amended by striking ``The maximum amount
which a contributor'' and inserting ``In the case of a contributor who
is an individual, the maximum amount the contributor''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1998.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S375)
Read twice and referred to the Committee on Finance.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line