,,ii  #aaf? ,,congress  #a/ ,session    
,s4 #bifb  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,decemb] #b1 #bjai,mr4 
,paul introduc$ ! foll[+ bill2 :i* 0    
read twice & ref]r$ to ! ,committee on  
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to p]mit )drawals 
f c]ta9 retirem5t plans = repaym5t (    
/ud5t loan debt1 & = o!r purposes4  #a4 
,%ort title ,?is ,act may be cit$ z !   
,high] ,education ,loan ,paym5t &       
,enhanc$ ,retirem5t ,act ( #bjai or !   
,,help] ,act ( #bjai4  #b4 ,)drawals =  
high] education exp5ses  7a7 #dja7k7    
plans ,p>agraph 7#ad7 ( section #dja7k7 
( ! ,int]nal ,rev5ue ,code ( #aihf is   
am5d$ by add+ at ! end ! foll[+ new     
subp>agraph3  7,c7 ,di/ributions =      
qualifi$ high] education exp5ses  7i7 ,9
 g5]al ,a di/ribution %all be treat$ z  
made ^u h>d%ip ( ! employee to ! ext5t t
 ! aggregate am\nt ( su* di/ributions   
dur+ ! taxable ye> does n exce$ ! less] 
(--  7,i7 ! am\nt paid by ! taxpay] =   
qualifi$ high] education exp5ses dur+   

su* taxable ye>1 or  7,,ii7 #e1bej4     
7ii7 ,di/ribution mu/ be o!rwise        
disall[$ ,clause 7i7 %all n apply to any
 di/ribution :i* is p]missible "u       
p>agraph 7#b77;,b77i7 7includ+          
di/ributions :i* w\ld be treat$ z made  
^u h>d%ip ( ! employee )\t reg>d to ?is 
subp>agraph74  7iii7 ,no requirem5t to  
demon/rate h>d%ip ,clause 7i7 %all apply
 )\t reg>d to any requirem5t to         
demon/rate f9ancial ne$ or h>d%ip1 or to
 demon/rate t o!r assets are n available
 to pay ! qualifi$ high] education      
exp5ses4  7iv7 ,additional tax "u       
section #gb7t7 n to apply ,no tax %all  
be impos$ "u section #gb7t7 on any am\nt
 treat$ z a h>d%ip di/ribution by reason
 ( clause 7i74  7v7 ,qualifi$ high]     
education exp5ses ,= purposes ( ?is     
subp>agraph1 ! t]m qualifi$ high]       
education exp5ses has ! mean+ giv5 su*  
t]m by section #gb7t77#g74  4  7b7      
#djc7;b7 plans ,p>agraph 7#aa7 ( section
 #djc7;b7 ( ! ,int]nal ,rev5ue ,code (  
#aihf is am5d$ by add+ at ! end !       

foll[+3 ,"u rules simil> to ! rules (   
section #dja7k77#ad77;,c71 a di/ribution
 %all be treat$ z made ^u h>d%ip ( !    
employee to ! ext5t t ! aggregate am\nt 
( su* di/ributions dur+ ! taxable ye>   
does n exce$ ! less] ( ! am\nt paid by !
 taxpay] = qualifi$ high] education     
exp5ses dur+ su* taxable ye>1 or        
#e1bej44  7c7 #deg plans ,p>agraph 7#a7 
( section #deg7;d7 ( ! ,int]nal ,rev5ue 
,code ( #aihf is am5d$ by add+ at ! end 
! foll[+3 ,"u rules simil> to ! rules ( 
section #dja7k77#ad77;,c7 7& )\t reg>d  
to :e!r ! exp5ses are un=ese571 a       
di/ribution %all be treat$ z made by    
reason ( un=ese5 em]g5cy to ! ext5t t ! 
aggregate am\nt ( su* di/ributions dur+ 
! taxable ye> does n exce$ ! less] ( !  
am\nt paid by ! taxpay] = qualifi$ high]
 education exp5ses dur+ su* taxable ye>1
 or #e1bej44  7d7 ,effective date ,!    
am5dm5t made by ?is section %all apply  
to di/ributions made aft] ,decemb] #ca1 
#bjai4  #c4 ,p5alty-free )drawals f     
,i,r,as = /ud5t loan exp5ses  7a7 ,9    

g5]al ,p>agraph 7#g7 ( section #gb7t7 ( 
! ,int]nal ,rev5ue ,code ( #aihf is     
am5d$ by add+ at ! end ! foll[+ new     
subp>agraph3  7,c7 ,/ud5t loans ,su* t]m
 %all include am\nts paid 9 repaym5t (  
any loan made to an individual describ$ 
9 subp>agraph 7,a7 to assi/ ! individual
 9 att5d+ an educational organization   
describ$ 9 section                      
#agj7;b77#a77;,a77ii74  4  7b7          
,effective date ,! am5dm5t made by ?is  
section %all apply to di/ributions made 
aft] ,decemb] #ca1 #bjai4  #d4          
,exclusion ( di/ributions = educational 
exp5ses  7a7 ,9 g5]al ,section #djb ( ! 
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new           
subsection3  7m7 ,di/ributions =        
qualifi$ high] education exp5ses  7#a7  
,9 g5]al ,gross income = ! taxable ye>  
does n include-- 7,a7 any di/ribution f 
a qualifi$ ca% or def]r$ arrangem5t 7z  
def9$ 9 section #dja7k77#b771 an annuity
 contract describ$ 9 section #djc7;b71  
or an eligible def]r$ comp5sation plan  

describ$ 9 section #deg7;b7 :i* is      
ma9ta9$ by an eligible employ] describ$ 
9 section #deg7;e77#a77;,a71 :i* is     
treat$ z made ^u h>d%ip ( ! employee by 
reason ( section #dja7k77#ad77;,c71 !   
la/ s5t5ce ( section #djc7;b77#aa71 or !
 la/ s5t5ce ( section #deg7;d77#a71 or  
7,b7 any di/ribution f an individual    
retirem5t acc\nt 7z def9$ 9 section     
#djh7;a77 to :i* section #gb7t77#b77;,e7
 applies4  7#b7 ,di/ributions mu/       
o!rwise be includible  7,a7 ,9 g5]al ,an
 am\nt %all be treat$ z describ$ 9      
p>agraph 7#a7 only to ! ext5t t su*     
am\nt w\ld be includible 9 gross income 
)\t reg>d to su* p>agraph4  7,b7        
,application ( section #gb ,9 det]m9+   
:e!r a di/ribution w\ld be includible 9 
gross income b = ?is subsection1 rules  
simil> to ! rules ( subsection          
7l77#c77;,b7 %all apply 7by tak+ into   
acc\nt all retirem5t plans 9 :i* !      
taxpay] is a p>ticipant74  4  7b7       
,coord9ation ) d$uctions & cr$its  7#a7 
,coord9ation ) ,am]ican ,opportunity &  

,lifetime ,le>n+ cr$its  7,a7 ,9 g5]al  
,p>agraph 7#b7 ( section #be;,a7g7 ( !  
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by r$esignat+ subp>agraph 7,c7 z        
subp>agraph 7,d71 by /rik+ & at ! end ( 
subp>agraph 7,b71 & by ins]t+ aft]      
subp>agraph 7,b7 ! foll[+ new           
subp>agraph3  7,c7 a di/ribution f a    
qualifi$ ca% or def]r$ arrangem5t 7z    
def9$ 9 section #dja7k77#b771 an annuity
 contract describ$ 9 section #djc7;b71  
an eligible def]r$ comp5sation plan     
describ$ 9 section #deg7;b7 :i* is      
ma9ta9$ by an eligible employ] describ$ 
9 section #deg7;e77#a77;,a71 or an      
individual retirem5t acc\nt 7z def9$ 9  
section #djh7;a77 :i* is exclud$ f gross
 income ( ! di/ributee "u section       
#djb7m7 7o!r ?an any portion ( su* a    
di/ribution :i* is attributable to !    
repaym5t ( a loan describ$ 9 section    
#gb7t77#g77;,c771 &  4  7,b7            
,coord9ation ) waiv] ( p5alty           
,subp>agraph 7,b7 ( section #gb7t77#g7  
is am5d$ by ins]t+ 7)\t reg>d to        

subp>agraph 7,c7 !re(7 be=e ! p]iod4    
7#b7 ,d$uction = int]e/ on education    
loans ,p>agraph 7#a7 ( section #bba7;e7 
( su* ,code is am5d$ by ins]t+ be=e !   
p]iod at ! end ! foll[+3 1 or = any     
am\nt paid ) a di/ribution :i* is       
exclud$ f gross income "u section       
#djb7m74  7c7 ,effective date ,! am5dm5t
 made by ?is section %all apply to      
di/ributions made aft] ,decemb] #ca1    
#bjai4  #e4 ,inclusion ( employ] /ud5t  
loan paym5ts 9 educational assi/ance    
programs  7a7 ,9 g5]al ,p>agraph 7#a7 ( 
section #abg7;c7 ( ! ,int]nal ,rev5ue   
,code ( #aihf is am5d$--  7#a7 by /rik+ 
& at ! end ( subp>agraph 7,a72  7#b7 by 
add+ & at ! end ( subp>agraph 7,b72 &   
7#c7 by ins]t+ aft] subp>agraph 7,b7 !  
foll[+ new subp>agraph3  7,c7 ! paym5t1 
by an employ]1 ( am\nts 9 repaym5t ( any
 loan made to ! employee to assi/ !     
employee 9 att5d+ an educational        
organization describ$ 9 section         
#agj7;b77#a77;,a77ii71  4  7b7 ,d5ial ( 
d\ble b5efit ,p>agraph 7#a7 ( section   

#bba7;e7 ( ! ,int]nal ,rev5ue ,code (   
#aihf1 z am5d$ by section #d1 is fur!r  
am5d$ by ins]t+ :i* is exclud$ f gross  
income "u section #abg or is aft] or =  
any am\nt4  7c7 ,effective date ,!      
am5dm5ts made by ?is section %all apply 
to taxable ye>s beg9n+ aft] ,decemb]    
#ca1 #bjai4  #f4 ,repeal ( cap on       
d$uction = int]e/ on education loans    
7a7 ,9 g5]al ,section #bba ( ! ,int]nal 
,rev5ue ,code ( #aihf is am5d$ by /rik+ 
subsections 7b7 & 7f74  7b7 ,c>ryov] (  
excess int]e/ ,section #bba ( ! ,int]nal
 ,rev5ue ,code ( #aihf1 z s am5d$1 is   
am5d$ by ins]t+ aft] subsection 7a7 !   
foll[+ new subsection3  7b7 ,c>ryov] ,if
 ! am\nt ( ! d$uction all[able "u       
subsection 7a7 exce$s ! taxable income (
 ! taxpay] = ! taxable ye> 7det]m9$ )\t 
reg>d to ?is section71 !n an am\nt equal
 to su* excess %all be treat$ z int]e/  
paid by ! taxpay] 9 ! succe$+ taxable   
ye> on a qualifi$ education loan4  4    
7c7 ,effective date ,! am5dm5ts made by 
?is section %all apply to taxable ye>s  

beg9n+ aft] ! date ( ! enactm5t ( ?is   
,act4  #g4 ,employ] ,ro? contributions  
7a7 ,9 g5]al ,subsection 7a7 ( section  
#djb;,a ( ! ,int]nal ,rev5ue ,code (    
#aihf is am5d$-- 7#a7 by /rik+ & at !   
end ( p>agraph 7#a72  7#b7 by r$esignat+
 p>agraph 7#b7 z p>agraph 7#c72 &  7#c7 
by ins]t+ aft] p>agraph 7#a7 ! foll[+   
new p>agraph3  7#b7 9 ! case ( a        
qualifi$ ca% or def]r$ arrangem5t 7z    
def9$ 9 section #dja7k77#b771 any       
designat$ ,ro? employ] contribution made
 pursuant to ! arrangem5t %all be treat$
 = purposes ( ?is *apt] 9 ! same mann] z
 contributions describ$ 9 section       
#dja7k77#c77;,d77ii71 except t su*      
contribution %all n be excludable f     
gross income1 &  4  7b7 ,con=m+ am5dm5ts
  7#a7 ,p>agraph 7#a7 ( section         
#djb;,a7b7 ( ! ,int]nal ,rev5ue ,code ( 
#aihf is am5d$-- 7,a7 by /rik+ may elect
 to make & ins]t+ 8may elect--  7,a7 to 
make  2  7,b7 by /rik+ ! p]iod at ! end 
& ins]t+ 1 &2 &  7,c7 by add+ at ! end !
 foll[+ new subp>agraph3  7,b7 9 ! case 

( a qualifi$ ca% or def]r$ arrangem5t 7z
 def9$ 9 section #dja7k77#b771 to h !   
employee's employ] make designat$ ,ro?  
employ] contributions 9 lieu ( all or a 
portion ( ! mat*+ or nonelective        
contributions ! employee is o!rwise     
eligible to receive "u ! arrangem5t4  4 
7#b7 ,p>agraph 7#b77;,a7 ( section      
#djb;,a7b7 ( su* ,code is am5d$ by /rik+
 ( ea* employee & ins]t+ & designat$    
,ro? employ] contributions ) respect to 
ea* employee4  7#c7 ,subp>agraph 7,b7 ( 
section #djb;,a7d77#b7 ( su* ,code is   
am5d$ by ins]t+ 1 or elect$ to h made a 
designat$ ,ro? employ] contribution1    
aft] designat$ ,ro? contribution bo?    
places x appe>s 9 clauses 7i7 & 7ii74   
7c7 ,designat$ ,ro? employ] contribution
 ,subsection 7c7 ( section #djb;,a ( !  
,int]nal ,rev5ue ,code ( #aihf is       
am5d$-- 7#a7 by ins]t+ & designat$ ,ro? 
employ] contributions aft] designat$    
,ro? contributions 9 ! head+2 &  7#b7 by
 add+ at ! end ! foll[+ new p>agraph3   
7#e7 ,designat$ ,ro? employ]            

contribution  7,a7 ,9 g5]al ,! t]m      
designat$ ,ro? employ] contribution     
means any contribution describ$ 9       
subp>agraph 7,b7 made "u a qualifi$ ca% 
or def]r$ arrangem5t 7z def9$ 9 section 
#dja7k77#b77 :i*--  7i7 is excludable f 
gross income ( an employee )\t reg>d to 
?is section1 &  7ii7 ! employee         
designates 7at su* "t & 9 su* mann] z ! 
,secret>y may prescribe7 z n be+ s      
excludable4  7,b7 ,contributions        
describ$ ,! contributions describ$ 9 ?is
 subp>agraph are-- 7i7 mat*+            
contributions 7z def9$ 9 section        
#dja7m77#d77;,a77 :i* meet ! requirem5ts
 ( subp>agraphs 7,b7 & 7,c7 ( section   
#dja7k77#b71 &  7ii7 qualifi$           
nonelective contributions 7)9 ! mean+ ( 
section #dja7m77#d77;,c774  7,c7        
,designation limits ,! am\nt ( mat*+    
contributions & qualifi$ nonelective    
contributions :i* an employee may       
designate "u subp>agraph 7,a7 %all n    
exce$ ! excess 7if any7 (--  7i7 !      
maximum am\nt ( su* contributions       

excludable f gross income ( ! employee =
 ! taxable ye> 7)\t reg>d to ?is        
section71 ov]  7ii7 ! aggregate am\nt ( 
su* contributions ) respect to !        
employee = ! taxable ye> :i* ! employee 
does n designate "u subp>agraph 7,a74  4
  7d7 ,effective date ,! am5dm5ts made  
by ?is section %all apply to            
contributions made 9 taxable ye>s beg9n+
 aft] ,decemb] #ca1 #bjai4  #h4 ,maximum
 contributions  7a7 ,elective def]rals  
7#a7 ,9 g5]al ,subp>agraph 7,b7 (       
section #djb7;g77#a7 ( ! ,int]nal       
,rev5ue ,code ( #aihf is am5d$ by /rik+ 
#ae1jjj & ins]t+ #be1jjj4  7#b7         
,co/-(-liv+ adju/m5t ,p>agraph 7#d7 (   
section #djb7;g7 ( su* ,code is am5d$-- 
7,a7 by /rik+ #ae1jjj & ins]t+ #be1jjj2 
7,b7 by /rik+ ,decemb] #ca1 #bjjf &     
ins]t+ ,decemb] #ca1 #bjbj2 &  7,c7 by  
/rik+ ,july #a1 #bjje & ins]t+ ,july #a1
 #bjai4  7#c7 ,con=m+ am5dm5t ,clause   
7ii7 ( section #djb7;g77#g77;,a7 ( su*  
,code is am5d$ by /rik+ #ae1jjj & ins]t+
 #be1jjj4  7b7 #deg plans  7#a7 ,9 g5]al

 ,subp>agraph 7,a7 ( section            
#deg7;e77#ae7 ( ! ,int]nal ,rev5ue ,code
 ( #aihf is am5d$ by /rik+ #ae1jjj &    
ins]t+ #be1jjj4  7#b7 ,co/-(-liv+       
adju/m5t ,subp>agraph 7,b7 ( section    
#deg7;e77#ae7 ( su* ,code is am5d$--    
7,a7 by /rik+ #ae1jjj & ins]t+ #be1jjj2 
7,b7 by /rik+ ,decemb] #ca1 #bjjf &     
ins]t+ ,decemb] #ca1 #bjbj2 &  7,c7 by  
/rik+ ,july #a1 #bjje & ins]t+ ,july #a1
 #bjai4  7c7 ,employ$ individual        
#dja7k7s ,subsection 7k7 ( section #dja 
( ! ,int]nal ,rev5ue ,code ( #aihf is   
am5d$ by add+ at ! end ! foll[+ new     
p>agraph3  7#ae7 ,employ$ individual    
arrangem5t  7,a7 ,9 g5]al ,a ca% or     
def]r$ arrangem5t %all n be treat$ z    
fail+ to meet any requirem5t ( ?is      
subsection solely because1 "u !         
arrangem5t1 an employee may elect to    
make additional elective def]rals :i*   
are n subject to1 & are n tak5 into     
acc\nt "u1 p>agraph 7#c7 to a sep>ate   
acc\nt f o!r contributions made on      
behalf ( ! employee "u ! arrangem5t1    

if--  7i7 all employees eligible to     
p>ticipate 9 ! arrangem5t are eligible  
to make su* election1  7ii7 ! aggregate 
( all elective def]rals made by !       
employee "u ! arrangem5t does n exce$ ! 
limitation ( section #djb7;g71 &  7iii7 
no mat*+ or nonelective contributions   
may be made to su* acc\nt or ) respect  
to elective def]rals contribut$ to su*  
acc\nt4  7,b7 ,di/ribution1 etc4 rules  
to apply ,! rules ( ?is subsection1 o!r 
?an p>agraph 7#c71 %all apply to any    
acc\nt e/abli%$ "u subp>agraph 7,a74    
7,c7 ,elective def]ral ,= purposes ( ?is
 p>agraph1 ! t]m elective def]ral means 
any employ] contribution "u a qualifi$  
ca% or def]r$ arrangem5t to ! ext5t n   
includible 9 gross income = ! taxable   
ye> "u section #djb7;e77#c7 7det]m9$ )\t
 reg>d to section #djb7;g774  4  7d7    
,effective date ,! am5dm5ts made by ?is 
section %all apply to contributions made
 9 taxable ye>s beg9n+ aft] ,decemb]    
#ca1 #bjai4