,i #aaeth ,,congress #ast ,session ,h4 ,r4 #ebi ,,in ,,the ,,house ,,of ,,representatives ,january #ac1 #bjag,ms4 ,jenkins of ,kansas 7for herself and ,mr4 ,kind7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to make improvements in the rules related to qualified tuition programs and qualified ,,able programs4 #a4 ,short title ,this ,act may be cited as the #ebi and ,,able ,account ,improvement ,act of #bjag4 #b4 ,employer contributions to qualified tuition programs and qualified ,,able programs 7a7 ,in general ,subsection 7a7 of section #acb of the ,internal ,revenue ,code of #aihf is amended by striking or at the end of paragraph 7#g71 by striking the period at the end of paragraph 7#h7 and inserting 1 or1 and by adding at the end the following new paragraph3 7#i7 qualified tuition program and qualified ,,able program contributions4 4 7b7 ,qualified tuition program and qualified ,,able program contributions defined ,section #acb of such ,code is amended by redesignating subsection 7o7 as subsection 7p7 and inserting after subsection 7n7 the following new subsection3 7o7 ,qualified tuition program and qualified ,,able program contributions defined 7#a7 ,in general ,for purposes of this section1 the term qualified tuition and qualified ,,able program contributions means contributions 7including matching contributions7 made by an employer directly to a qualified tuition program 7as described in section #ebi7 or qualified ,,able program 7as described in section #ebi;,a7 designated by an employee if-- 7,a7 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 7within the meaning of section #ebi7;e77#b771 and 7,b7 such contribution is made in connection with a qualified payroll deduction contribution program established by the employer4 7#b7 ,qualified payroll deduction contribution program ,for purposes of this subsection1 the term qualified payroll deduction contribution program means a program established by an employer-- 7,a7 under which employees may elect to make contributions to accounts described in paragraph 7#a77;,a7 which reduce the amount of wages received directly by such employee by the amount of such contribution1 and 7,b7 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 7as defined in section #dad7q774 7#c7 ,limitation on exclusion ,the amount of qualified tuition and qualified ,,able program contributions which may be excluded from gross income under subsection 7a77#i7 with respect to any employee shall not exceed #ajj in any calendar year4 7#d7 ,nondiscrimination rule for employer contributions ,subsection 7a77#i7 shall only apply to contributions provided with respect to a highly compensated employee if such contributions meet the requirements of paragraph 7#b77;,b74 7#e7 ,inflation adjustment 7,a7 ,in general ,in the case of any taxable year beginning in a calendar year after #bjag1 the #ajj amount contained in paragraph 7#c7 shall be increased by an amount equal to-- 7i7 such dollar amount1 multiplied by 7ii7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which the taxable year begins1 determined by substituting calendar year #bjaf for calendar year #aiib in subparagraph 7,b7 thereof4 7,b7 ,rounding ,any increase determined under subparagraph 7,a7 shall be rounded to the nearest multiple of #be4 4 7c7 ,effective date ,the amendments made by this section shall apply to contributions made after ,december #ca1 #bjaf4 #c4 ,tax credit for small employer costs of establishing direct payroll deduction into qualified tuition programs and qualified ,,able programs 7a7 ,in general ,section #de;,e of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7f7 ,application to programs for payroll deduction contributions to qualified tuition programs and qualified ,,able programs ,in the case of a qualified payroll deduction contribution program 7as defined in section #acb7o77#b77 established by an employer-- 7#a7 such program shall be treated as an eligible employer plan for purposes of this section1 7#b7 this section 7including the limitation of subsection 7b77 shall be applied separately with respect to such programs and any other eligible employer plans of the employer1 and 7#c7 subsection 7d77#a77;,a77ii7 shall be applied by substituting education for retirement-related education4 4 7b7 ,clerical amendments 7#a7 ,the heading for section #de;,e of such ,code is amended by striking pension4 7#b7 ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by striking the item relating to section #de;,e and inserting the following new item3 ,sec4 #de;,e4 ,small employer plan startup costs4 4 7c7 ,effective date ,the amendments made by this section shall apply to costs paid or incurred in taxable years beginning after the date of the enactment of this ,act4 #d4 ,exemptions from additional tax for certain distributions from qualified tuition programs 7a7 ,in general ,section #ebi7;c77#f7 of the ,internal ,revenue ,code of #aihf is amended by striking the last sentence and inserting the following3 ,this paragraph shall not apply to the extent that-- 7,a7 a payment or distribution is used 7within #ij days of the payment or distribution7 to make a payment of interest or principal on a qualified education loan 7as defined in section #bbb7;d77#a77 on behalf of the designated beneficiary or a member of the family of such designated beneficiary within the meaning of section #ebi7;e77#b771 or 7,b7 the recipient of a payment or distribution makes 7within #ij days of the receipt of the payment or distribution7 a contribution to an organization described in section #agj7;b77#a77;,a7 7other than any organization described in section #eji7;a77#c7 or any fund or account described in section #diff7;d77#b771 but only if-- 7i7 a deduction for the entire payment or distribution is allowable under section #agj1 and 7ii7 the total payments and distributions taken into account under this subparagraph with respect to such recipient for any taxable year does not exceed #a1jjj4 4 7b7 ,effective date ,the amendments made by this section shall apply to distributions after the date of the enactment of this ,act4 #e4 ,clarification regarding investment direction in qualified tuition programs and qualified ,,able programs 7a7 ,investment direction in qualified tuition programs ,paragraph 7#d7 of section #ebi7;b7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following3 ,for purposes of this paragraph1 rebalancing investments among broad-based investment strategies established under the program shall not be treated as investment direction by a contributor or designated beneficiary unless the specific investments within those broad-based strategies are directed by the contributor or designated beneficiary44 7b7 ,investment direction in qualified ,,able programs ,paragraph 7#d7 of section #ebi;,a7b7 of such ,code is amended by adding at the end the following3 ,for purposes of this paragraph1 rebalancing investments among broad-based investment strategies established under the program shall not be treated as investment direction by a designated beneficiary unless the specific investments within those broad-based strategies are directed by the designated beneficiary44 7c7 ,effective date ,the amendments made by this section shall apply with respect to calendar years beginning after the date of the enactment of this ,act4 #f4 ,rollovers between qualified tuition programs and qualified ,,able programs 7a7 ,rollovers from qualified tuition programs to qualified ,,able programs ,clause 7i7 of section #ebi7;c77#c77;,c7 of the ,internal ,revenue ,code of #aihf is amended by striking or at the end of subclause 7,i71 by striking the period at the end of subclause 7,,ii7 and inserting 1 or1 and by adding at the end the following new subclause3 7,,iii7 to an ,,able account 7as defined in section #ebi;,a7e77#f77 of the designated beneficiary or a member of the family of the designated beneficiary4 ,subclause 7,,iii7 shall not apply to so much of a distribution which1 when added to all other contributions made to the ,,able account for the taxable year1 exceeds the limitation under section #ebi;,a7b77#b77;,b74 4 7b7 ,rollovers from qualified ,,able programs to qualified tuition programs ,clause 7i7 of section #ebi;,a7c77#a77;,c7 of such ,code is amended-- 7#a7 by striking such payment or distribution1 into another and inserting such payment or distribution-- 7,i7 into another 2 7#b7 by striking the period at the end and inserting 1 or1 and 7#c7 by adding at the end the following new subclause3 7,,ii7 to a qualified tuition program 7as described in section #ebi7 for the benefit of the same designated beneficiary or a member of the family of such designated beneficiary4 4 7c7 ,effective date ,the amendments made by this section shall apply to distributions after the date of the enactment of this ,act4