,i #aai? ,,congress #b;d ,session ,h4 ,r4 #ajhja ,,9 ,,! ,,h\se ,,( ,,repres5tatives ,octob] #ac1 #bjbf,ms4 ,mace introduc$ ! foll[+ bill2 :i* 0 ref]r$ to ! ,committee on ,education & ,work=ce1 & 9 addition to ! ,committee on ,ways & ,means1 = a p]iod to be subsequ5tly det]m9$ by ! ,speak]1 9 ea* case = consid]ation ( su* provisions z fall )9 ! jurisdiction ( ! committee conc]n$ ,a ,,bill ,to direct ! ,secret>y ( ! ,treasury to c>ry out a program "u :i* ,f$]al funds = elem5t>y & second>y education are ei!r provid$ directly to p>5ts to cov] c]ta9 educational exp5ses or approv$ by p>5ts = di/ribution to ! public s*ool _! *ild att5ds1 & = o!r purposes4 #a4 ,%ort title ,?is ,act may be cit$ z ! ,s*ool ,fre$om ,act ( #bjbf4 #b4 ,t]m9ation ( ,f$]al elem5t>y & second>y education programs 7a7 ,t]m9ation ,ea* cov]$ ,f$]al education program %all t]m9ate on a date det]m9$ by ! ,secret>y ( ,education t is n lat] ?an ,june #cj1 #bjbg4 7b7 ,w9d-,d[n ( programs ,! ,secret>y ( ,education %all take su* /eps z may be necess>y to provide = ! ord]ly cessation ( activities "u ea* cov]$ ,f$]al education program by n lat] ?an ! date det]m9$ by ! ,secret>y "u subsection 7a74 7c7 ,prohibition on ,f$]al funds ,beg9n+ on ! date ( enactm5t ( ?is ,act1 no ,f$]al funds may be appropriat$ = a cov]$ ,f$]al education program4 7d7 ,allocation ( unobligat$ am\nts ,any am\nts appropriat$ = a cov]$ ,f$]al education program t are unobligat$ z ( ! date su* program t]m9ates "u subsection 7a7 %all be us$ to c>ry out ! ,s*ool ,fre$om ,acc\nt program "u section #c4 7e7 ,reorganization plan 7#a7 ,submission ( plan ,n lat] ?an ! date det]m9$ by ! ,secret>y ( ,education "u subsection 7a71 ! ,secret>y ( ,education %all transmit to ! appropriate congressional committees a reorganization plan reg>d+ ! consolidation1 reorganization1 & /reaml9+ ( ! ,dep>tm5t ( ,education 9 connection ) c>ry+ out subsection 7a7 & 7b74 7#b7 ,plan elem5ts ,! plan transmitt$ "u p>agraph 7#a7 %all conta9 su* elem5ts z ! ,secret>y ( ,education det]m9es appropriate4 7#c7 ,modification ( plan ,! ,secret>y ( ,education may1 on ! basis ( consultations ) ! appropriate congressional committees1 modify or revise any "p ( ! plan transmitt$ "u p>agraph 7#a7 until t "p ( ! plan becomes effective 9 accordance ) p>agraph 7#d74 7#d7 ,effective date ,! reorganization plan describ$ 9 ?is subsection1 includ+ any modifications or revisions ( ! plan "u p>agraph 7#b71 %all become effective on a date det]m9$ by ! ,secret>y ( ,education t is n lat] ?an #ah mon?s aft] ! date ( enactm5t ( ?is ,act4 7#e7 ,sup]s$es exi/+ law ,p>agraph 7#d7 %all apply not)/&+ section #ije7;b7 ( title #e1 ,unit$ ,/ates ,code4 #c4 ,s*ool ,fre$om ,acc\nt program 7a7 ,acc\nt creation 7#a7 ,9 g5]al ,! ,secret>y ( ! ,treasury %all e/abli% a sav+s acc\nt to be kn[n z a ,s*ool ,fre$om ,acc\nt on behalf ( an eligible individual-- 7,a7 9 ! case ( an eligible individual :o is enroll$ 9 an elem5t>y or second>y s*ool on ! date ( enactm5t ( ?is ,act or w become eligible to enroll 9 su* a s*ool 9 less ?an #fj days aft] ! date ( enactm5t ( ?is ,act1 #cj days aft] ! date det]m9$ by ! ,secret>y ( ,education "u section #b7;a72 or 7,b7 9 ! case ( an eligible individual :o is n enroll$ 9 an elem5t>y or second>y s*ool on ! date ( enactm5t ( ?is ,act & w n become eligible to enroll 9 su* a s*ool until at lea/ #fj days aft] ! date ( enactm5t ( ?is ,act1 #fj days prior to ! date t su* individual is eligible to att5d an elem5t>y s*ool4 7#b7 ,au?ority to collect in=mation ,! ,secret>y ( ! ,treasury %all take su* /eps z may be necess>y1 includ+ issuance ( regulations if ne$$1 to e/abli% a process to collect ! in=mation necess>y to det]m9e :e!r an individual is eligible = a ,s*ool ,fre$om ,acc\nt "u p>agraph 7#a74 7b7 ,f$]al deposits 7#a7 ,9 g5]al ,= ea* s*ool ye> beg9n+ on or aft] ,july #a1 #bjbg1 9 addition to any am\nt deposit$ pursuant to p>agraph 7#c71 ! ,secret>y ( ! ,treasury %all deposit into ea* ,s*ool ,fre$om ,acc\nt an am\nt equal to ! p]-pupil ,f$]al exp5diture applicable to an eligible individual = ! s*ool ye>1 z det]m9$ "u p>agraph 7#b74 7#b7 ,p]-pupil ,f$]al exp5diture 7,a7 ,fir/ ye> ( program ,! p]-pupil ,f$]al exp5diture applicable to an eligible individual = ! fir/ s*ool ye> t beg9s on or aft] ,july #a1 #bjbg1 %all be equal to-- 7i7 ! sum ( ! total am\nt ( ,f$]al funds appropriat$ to c>ry out ?is section = fiscal ye> #bjbg & any am\nts made available "u section #b7;d72 divid$ by 7ii7 ! total numb] ( eligible individuals c\nt$ = su* s*ool ye>4 7,b7 ,subsequ5t ye>s ,! p]-pupil ,f$]al exp5diture applicable to an eligible individual = any s*ool ye> aft] ! ye> describ$ 9 subp>agraph 7,a7 %all be equal to-- 7i7 ! total am\nt ( ,f$]al funds appropriat$ to c>ry out ?is section = ! fiscal ye> t corresponds to su* s*ool ye>2 divid$ by 7ii7 ! total numb] ( eligible individuals c\nt$ = su* s*ool ye>4 7#c7 ,*ildr5 ) a disability ,= ea* s*ool ye> beg9n+ on or aft] ,july #a1 #bjbg1 9 addition to ! am\nt deposit$ pursuant to p>agraph 7#a71 ! ,secret>y ( ! ,treasury %all deposit into ea* ,s*ool ,fre$om ,acc\nt e/abli%$ on behalf ( an eligible individual :o is a *ild ) a disability-- 7,a7 = ! s*ool ye> beg9n+ on ,july #a1 #bjbg1 #b1jjj2 & 7,b7 = ea* subsequ5t s*ool ye>1 ! am\nt det]m9$ "u ?is p>agraph = ! prec$+ s*ool ye>1 increas$ by ! p]c5tage increase 9 ! ,p]sonal ,consumption ,exp5ditures price index 7z publi%$ by ! ,bureau ( ,economic ,analysis7 = ! #ab-mon? p]iod end+ on ,decemb] #ca ( ! previ\s cal5d> ye>4 7#d7 ,classification ,funds deposit$ into a ,s*ool ,fre$om ,acc\nt pursuant to ?is subsection %all be classifi$ z ,f$]al ,,sfa ,funds4 7c7 ,p>5tal deposits 7#a7 ,9 g5]al ,n lat] ?an #cj days aft] ! date det]m9$ by ! ,secret>y ( ,education "u section #b7;a7 & consi/5t ) ! provisions ( section #ecj;,b ( ! ,int]nal ,rev5ue ,code ( #aihf1 ! ,secret>y ( ! ,treasury %all issue regulations e/abli%+ h[ a p>5t ( an eligible individual ) a ,s*ool ,fre$om ,acc\nt may deposit funds into su* ,s*ool ,fre$om ,acc\nt1 includ+ h[ su* a p>5t may make su* a deposit z a pre-tax payroll d$uction4 7#b7 ,classification ,funds deposit$ into a ,s*ool ,fre$om ,acc\nt 9 accordance ) regulations issu$ pursuant to p>agraph 7#a7 %all be classifi$ z ,p>5tal ,,sfa ,funds4 7d7 ,/ate deposits 7#a7 ,9 g5]al ,n lat] ?an #cj days aft] ! date det]m9$ by ! ,secret>y ( ,education "u section #b7;a71 ! ,secret>y ( ! ,treasury %all issue regulations e/abli%+ h[ ,/ates may deposit funds into a ,s*ool ,fre$om ,acc\nt4 7#b7 ,preemption ,except z provid$ 9 section #d7;a77#d71 no ,/ate may e/abli% any re/rictions or conditions on h[ funds deposit$ by ! ,/ate into a ,s*ool ,fre$om ,acc\nt may be sp5t4 7#c7 ,classification ,funds deposit$ into a ,s*ool ,fre$om ,acc\nt 9 accordance ) regulations issu$ pursuant to p>agraph 7#a7 %all be classifi$ z ,/ate ,,sfa ,funds4 7e7 ,availability ( funds 7#a7 ,9 g5]al ,n lat] ?an #cj days aft] ! date det]m9$ by ! ,secret>y ( ,education "u section #b7;a71 ! ,secret>y ( ! ,treasury %all issue regulations e/abli%+ h[ a p>5t ( an eligible individual ) a ,s*ool ,fre$om ,acc\nt-- 7,a7 notifies ! ,secret>y ( ! ,treasury t ! individual is or is n att5d+ a public elem5t>y or second>y s*ool = a s*ool ye>2 7,b7 9 ! case ( a p>5t :o elects to h ! individual att5d a public elem5t>y or second>y s*ool = a s*ool ye>-- 7i7 approves ! disbursem5t ( ! annual am\nt ( ,f$]al ,,sfa ,funds disburs$ to ! ,s*ool ,fre$om ,acc\nt pursuant to p>agraphs 7#a7 & 7#c7 ( subsection 7b7 to ! local educational ag5cy s]v+ ! s*ool att5d$ by ! individual = use 9 accordance ) subsection 7f77#b72 & 7ii7 may access any ,p>5tal ,,sfa ,funds & ,/ate ,,sfa ,funds 9 ! ,s*ool ,fre$om ,acc\nt to pay = ! educational exp5ses ( ! individual 9 accordance ) subsection 7f77#a72 7,c7 9 ! case ( a p>5t :o elects to n h ! individual att5d a public elem5t>y or second>y s*ool = a s*ool ye>1 may access any ,f$]al ,,sfa ,funds1 ,p>5tal ,,sfa ,funds1 & ,/ate ,,sfa ,funds 9 ! ,s*ool ,fre$om ,acc\nt to pay = ! educational exp5ses ( ! individual 9 accordance ) subsection 7f77#a72 & 7,d7 may submit an application to ! ,secret>y ( ! ,treasury to be issu$ a paym5t c>d connect$ to ! ,s*ool ,fre$om ,acc\nt by ! ,secret>y ( ! ,treasury4 7#b7 ,default disbursem5t ,9 ! case t a p>5t ( an eligible individual ) a ,s*ool ,fre$om ,acc\nt fails to notify ! ,secret>y ( ! ,treasury t ! individual is n att5d+ a public elem5t>y or second>y s*ool = a s*ool ye> or fails to approve ! disbursem5t ( ,f$]al ,,sfa ,funds f ! ,s*ool ,fre$om ,acc\nt to ! local educational ag5cy s]v+ ! s*ool att5d$ by ! individual z requir$ "u regulations issu$ pursuant to p>agraph 7#a71 ! ,secret>y ( ! ,treasury %all disburse ! annual am\nt ( ,f$]al ,,sfa ,funds disburs$ to ! ,s*ool ,fre$om ,acc\nt pursuant to p>agraphs 7#a7 & 7#c7 ( subsection 7b7 to ! local educational ag5cy s]v+ ! la/ kn[n address ( ! individual4 7#c7 ,rule ( con/ruction ,no?+ 9 ?is subsection1 includ+ ! regulations issu$ "u p>agraph 7#a71 %all be con/ru$ to re/rict or o!rwise inhibit int]di/rict enrollm5t4 7f7 ,uses ( funds 7#a7 ,9 g5]al ,funds deposit$ into a ,s*ool ,fre$om ,acc\nt 7except = ,f$]al ,,sfa ,funds requir$ to be disburs$ to a local educational ag5cy "u regulations e/abli%$ pursuant to subsection 7e77 may be us$ to pay =-- 7,a7 books1 curricul> mat]ial1 & o!r in/ructional mat]ials1 includ+ curriculum mat]ials design$ = a home s*ool2 7,b7 te*nological educational mat]ials2 7,c7 onl9e educational mat]ials2 7,d7 tutor+ or educational classes outside ! home1 includ+ in/ruction z "p ( a micro s*ool or le>n+ pod2 7,e7 private s*ool tuition2 7,f7 extracurricul> activities2 7,g7 te/+ fees2 7,h7 a lic5s$ or accr$it$ p>apr(essional or educational aide2 7,i7 tuition = vocational or life skills education2 7,j7 co/s associat$ ) an annual education plan conduct$ by an indep5d5t evaluation team2 7,k7 tuition or fees = a non-public onl9e le>n+ program2 7,l7 s]vices provid$ by a public s*ool1 includ+ individual classes & extracurricul> programs2 7,m7 uni=ms pur*as$ f or ?r\gh a s*ool2 7,n7 educational or le>n+ diagno/ic tools2 7,o7 educational !rapies = a *ild ) a disability2 7,p7 educational & psy*ological evaluations2 7,q7 assi/ive te*nology r5tals2 or 7,r7 braille translation goods & s]vices4 7#b7 ,public s*ool funds ,f$]al ,,sfa ,funds disburs$ f a ,s*ool ,fre$om ,acc\nt to a local educational ag5cy "u regulations e/abli%$ pursuant to subsection 7e7 may be us$ by su* local educational ag5cy = any educational purpose au?oriz$ "u ! laws ( ! ,/ate 9 :i* su* local educational ag5cy is locat$4 7g7 ,limitation ,! ,secret>y ( ! ,treasury may n require t-- 7#a7 individuals obta9 preapproval prior to ! exp5diture ( am\nts f a ,s*ool ,fre$om ,acc\nt2 or 7#b7 ! exp5diture ( am\nts f a ,s*ool ,fre$om ,acc\nt be ?r\gh a specific m>ketplace or portal4 #d4 ,high] ,education & ,skills ,obta9m5t ,fund program 7a7 ,conv]sion ( ,s*ool ,fre$om ,acc\nt 7#a7 ,acc\nt creation ,a ,s*ool ,fre$om ,acc\nt e/abli%$ on behalf ( an eligible individual %all be conv]t$ by ! ,secret>y ( ! ,treasury into a sav+s acc\nt to be kn[n z a ,high] ,education & ,skills ,obta9m5t ,fund on behalf ( su* individual on ! e>li] ( ! foll[+3 7,a7 ,! date on :i* ! individual completes second>y s*ool4 7,b7 ,! date on :i* ! individual is no long] eligible to att5d a public elem5t>y or second>y s*ool due to ! individual's age4 7#b7 ,treatm5t ( ,f$]al ,,sfa ,funds ,any ,f$]al ,,sfa ,funds t rema9 9 a ,s*ool ,fre$om ,acc\nt at ! "t su* ,s*ool ,fre$om ,acc\nt is conv]t$ into a ,high] ,education & ,skills ,obta9m5t ,fund pursuant to p>agraph 7#a7 %all be transf]r$ to su* ,high] ,education & ,skills ,obta9m5t ,fund & be classifi$ z ,f$]al ,,hes( ,funds4 7#c7 ,treatm5t ( ,p>5tal ,,sfa ,funds ,any ,p>5tal ,,sfa ,funds t rema9 9 a ,s*ool ,fre$om ,acc\nt at ! "t su* ,s*ool ,fre$om ,acc\nt is conv]t$ into a ,high] ,education & ,skills ,obta9m5t ,fund pursuant to p>agraph 7#a7 %all be transf]r$ to su* ,high] ,education & ,skills ,obta9m5t ,fund & be classifi$ z ,p>5tal ,,hes( ,funds4 7#d7 ,treatm5t ( ,/ate ,,sfa ,funds ,ea* ,/ate %all det]m9e h[ funds deposit$ by ! ,/ate into a ,s*ool ,fre$om ,acc\nt are to be treat$ by ! ,secret>y ( ! ,treasury :5 su* ,s*ool ,fre$om ,acc\nt is conv]t$ into a ,high] ,education & ,skills ,obta9m5t ,fund pursuant to p>agraph 7#a71 includ+ requir+ su* funds to be transf]r$ to su* ,high] ,education & ,skills ,obta9m5t ,fund & be classifi$ z ,/ate ,,hes( ,funds or requir+ su* funds to be return$ to ! ,/ate4 7b7 ,)draw ( ,p>5tal ,,hes( ,funds ,n lat] ?an #cj days aft] ! date det]m9$ by ! ,secret>y ( ,education "u section #b7;a7 & consi/5t ) ! provisions ( section #ecj;,c ( ! ,int]nal ,rev5ue ,code ( #aihf1 ! ,secret>y ( ! ,treasury %all issue regulations e/abli%+ h[ an individual ) a ,high] ,education & ,skills ,obta9m5t ,fund may )draw ,p>5tal ,,hes( ,funds4 7c7 ,use ( funds ,funds 9 a ,high] ,education & ,skills ,obta9m5t ,fund may be us$ to pay = ! foll[+ po/second>y educational exp5ses3 7#a7 ,co/s ( att5dance at an in/itution ( high] education4 7#b7 ,co/s associat$ ) pursu+ c>e] & te*nical education4 7#c7 ,any o!r po/second>y educational exp5se z det]m9$ appropriate by ! ,secret>y ( ! ,treasury4 7d7 ,t]m9ation ,! ,secret>y ( ! ,treasury %all t]m9ate ! ,high] ,education & ,skills ,obta9m5t ,fund ( an individual on ! date on :i* su* individual atta9s ! age ( #cj ye>s4 7e7 ,return ( funds 7#a7 ,f$]al funds ,any ,f$]al ,,hes( ,funds rema9+ 9 a ,high] ,education & ,skills ,obta9m5t ,fund ( an individual on ! date su* fund t]m9ates "u subsection 7d7 %all be return$ to ! ,treasury ( ! ,unit$ ,/ates4 7#b7 ,p>5tal ,,hes( funds ,any ,p>5tal ,,hes( ,funds rema9+ 9 a ,high] ,education & ,skills ,obta9m5t ,fund ( an individual on ! date su* fund t]m9ates "u subsection 7d7 %all be provid$ to ! individual4 7#c7 ,/ate ,,hes( funds ,any ,/ate ,,hes( rema9+ 9 a ,high] ,education & ,skills ,obta9m5t ,fund ( an individual on ! date su* fund t]m9ates "u subsection 7d7 %all be disburs$ z specifi$ by ! ,/ate "u subsection 7a77#d74 7#d7 ,regulations ,n lat] ?an #ahj days aft] ! date det]m9$ by ! ,secret>y ( ,education "u section #b7;a71 ! ,secret>y ( ! ,treasury %all issue regulations z necess>y to c>ry out ?is subsection4 7f7 ,limitation ,! ,secret>y ( ! ,treasury may n require t-- 7#a7 individuals obta9 preapproval prior to ! exp5diture ( am\nts f a ,high] ,education & ,skills ,obta9m5t ,fund2 or 7#b7 ! exp5diture ( am\nts f a ,high] ,education & ,skills ,obta9m5t ,fund be ?r\gh a specific m>ketplace or portal4 #e4 ,tax treatm5t ( ,s*ool ,fre$om ,acc\nts & ,high] ,education & ,skills ,obta9m5t ,funds 7a7 ,9 g5]al ,"p ,,viii ( sub*apt] ,f ( *apt] #a ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new sections3 #ecj;,b4 ,s*ool ,fre$om ,acc\nts 7a7 ,treatm5t ( acc\nts 7#a7 ,9 g5]al ,a ,s*ool ,fre$om ,acc\nt is exempt f taxation "u ?is subtitle unless su* acc\nt has ceas$ to be a ,s*ool ,fre$om ,acc\nt4 ,not)/&+ ! prec$+ s5t5ce1 any su* acc\nt is subject to ! taxes impos$ by section #eaa 7relat+ to imposition ( tax on unrelat$ bus9ess income ( *>itable1 etc4 organizations74 7#b7 ,acc\nt ,t]m9ations ,rules simil> to ! rules ( p>agraphs 7#b7 & 7#d7 ( section #djh7;e7 %all apply to ,s*ool ,fre$om ,acc\nts1 & any am\nt treat$ z di/ribut$ "u su* rules %all be treat$ z n us$ to pay qualifi$ exp5ses4 7b7 ,treatm5t ( contributions 7#a7 ,d$uction = contributions by p>5ts ( acc\nt b5efici>y ,9 ! case ( a contribution to a ,s*ool ,fre$om ,acc\nt made by a p>5t ( ! b5efici>y ( su* ,acc\nt dur+ ! taxable ye> 7o!r ?an any contribution to :i* p>agraph 7#b7 applies71 !re %all be all[$ to su* p>5t a d$uction = su* taxable ye> an am\nt equal to su* contribution4 7#b7 ,exclusion ( employ] contributions ,9 ! case ( an employee :o is ! p>5t ( a b5efici>y ( a ,s*ool ,fre$om ,acc\nt1 gross income ( su* employee 7& ( su* b5efici>y7 does n include am\nts contribut$ by su* employee's employ] to su* ,acc\nt4 7c7 ,treatm5t ( di/ributions 7#a7 ,am\nts us$ = qualifi$ exp5ses ,any am\nt paid or di/ribut$ out ( a ,s*ool ,fre$om ,acc\nt :i* is us$ exclusively to pay qualifi$ exp5ses ( any acc\nt b5efici>y %all n be includible 9 gross income4 7#b7 ,inclusion ( am\nts n us$ = qualifi$ exp5ses ,any am\nt paid or di/ribut$ out ( a ,s*ool ,fre$om ,acc\nt :i* is n us$ exclusively to pay ! qualifi$ exp5ses ( ! acc\nt b5efici>y %all be includ$ 9 ! gross income ( su* b5efici>y4 7#c7 ,p5alties = di/ributions n us$ = qualifi$ exp5ses 7,a7 ,p5alties 7i7 ,tax p5alties ,! tax impos$ by ?is *apt] on ! acc\nt b5efici>y = any taxable ye> 9 :i* !re is a paym5t or di/ribution f a ,s*ool ,fre$om ,acc\nt ( su* b5efici>y :i* is includible 9 gross income "u p>agraph 7#b7 %all be increas$ by-- 7,i7 9 ! case ( ! fir/ su* paym5t or di/ribution1 #bj p]c5t ( ! am\nt :i* is s includible1 & 7,,ii7 9 ! case ( any subsequ5t su* paym5t or di/ribution1 #ej p]c5t ( ! am\nt :i* is s includible4 7ii7 ,crim9al p5alties ,9 ! case ( ! ?ird paym5t or di/ribution to :i* clause 7i7 applies 7& ea* su* paym5t or di/ribution subsequ5t to su* ?ird paym5t or di/ribution71 9 addition to any p5alty impos$ "u clause 7i71 su* b5efici>y may be imprison$ = up to #a ye> = ea* su* paym5t or di/ribution4 7,b7 ,exception = ,disability or ,dea? ,subp>agraph 7,a7 %all n apply if ! paym5t or di/ribution is made aft] ! acc\nt b5efici>y becomes disabl$ )9 ! mean+ ( section #gb7m77#g7 or dies4 7#d7 ,special rule = m9ors ,9 ! case ( any acc\nt b5efici>y :o has n atta9$ age #ah-- 7,a7 p>agraphs 7#b7 & 7#c7 %all be appli$ by sub/itut+ ! individual :o au?oriz$ su* di/ribution on behalf ( ! acc\nt b5efici>y = su* b5efici>y ea* place x appe>s1 & 7,b7 clauses 7i7 & 7ii7 ( p>agraph 7#c77;,a7 %all be appli$ sep>ately ) respect to ea* su* individual :o au?orizes di/ributions on behalf ( an acc\nt b5efici>y4 7#e7 ,treatm5t aft] ,dea? ( ,acc\nt ,b5efici>y 7,a7 ,treatm5t if designat$ b5efici>y is sp\se ,if ! acc\nt b5efici>y's surviv+ sp\se acquires su* b5efici>y's int]e/ 9 a ,s*ool ,fre$om ,acc\nt by reason ( be+ ! designat$ b5efici>y ( su* acc\nt at ! dea? ( ! acc\nt b5efici>y1 su* ,s*ool ,fre$om ,acc\nt %all be treat$ z if ! sp\se 7 ! acc\nt b5efici>y4 7,b7 ,o!r ,cases 7i7 ,9 g5]al ,if1 by reason ( ! dea? ( ! acc\nt b5efici>y1 any p]son acquires ! acc\nt b5efici>y's int]e/ 9 a ,s*ool ,fre$om ,acc\nt 9 a case to :i* subp>agraph 7,a7 does n apply-- 7,i7 su* acc\nt %all cease to be a ,s*ool ,fre$om ,acc\nt z ( ! date ( dea?1 & 7,,ii7 an am\nt equal to ! fair m>ket value ( ! assets 9 su* acc\nt on su* date %all be includible if su* p]son is n ! e/ate ( su* b5efici>y1 9 su* p]son's gross income = ! taxable ye> :i* includes su* date1 or if su* p]son is ! e/ate ( su* b5efici>y1 9 su* b5efici>y's gross income = ! la/ taxable ye> ( su* b5efici>y4 7ii7 ,special ,rules 7,i7 ,r$uction ( inclusion = pr$ea? exp5ses ,! am\nt includible 9 gross income "u clause 7i7 by any p]son 7o!r ?an ! e/ate7 %all be r$uc$ by ! am\nt ( qualifi$ exp5ses :i* 7 incurr$ by ! dec$5t be=e ! date ( ! dec$5t's dea? & paid by su* p]son )9 #a ye> aft] su* date4 7,,ii7 ,d$uction = e/ate taxes ,an appropriate d$uction %all be all[$ "u section #fia7;c7 to any p]son 7o!r ?an ! dec$5t or ! dec$5t's sp\se7 ) respect to am\nts includ$ 9 gross income "u clause 7i7 by su* p]son4 7d7 ,def9itions ,= purposes ( ?is section-- 7#a7 ,s*ool ,fre$om ,acc\nt ,! t]m ,s*ool ,fre$om ,acc\nt means a ,s*ool ,fre$om ,acc\nt )9 ! mean+ ( section #c ( ! ,s*ool ,fre$om ,act ( #bjbf4 7#b7 ,qualifi$ exp5ses ,! t]m qualifi$ exp5ses means ! exp5ses describ$ 9 section #c7;f77#a7 ( ! ,s*ool ,fre$om ,act ( #bjbf4 ,any di/ribution requir$ to be made to a local educational ag5cy "u section #c ( ! ,s*ool ,fre$om ,act ( #bjbf %all be treat$ z us$ = qualifi$ exp5ses4 #ecj;,c4 ,high] ,education & ,skills ,obta9m5t ,funds 7a7 ,treatm5t ( acc\nts 7#a7 ,9 g5]al ,a ,high] ,education & ,skills ,obta9m5t ,fund is exempt f taxation "u ?is subtitle unless su* acc\nt has ceas$ to be a ,high] ,education & ,skills ,obta9m5t ,fund4 ,not)/&+ ! prec$+ s5t5ce1 any su* acc\nt is subject to ! taxes impos$ by section #eaa 7relat+ to imposition ( tax on unrelat$ bus9ess income ( *>itable1 etc4 organizations74 7#b7 ,acc\nt ,t]m9ations ,rules simil> to ! rules ( p>agraphs 7#b7 & 7#d7 ( section #djh7;e7 %all apply to ,high] ,education & ,skills ,obta9m5t ,fund1 & any am\nt treat$ z di/ribut$ "u su* rules %all be treat$ z n us$ to pay qualifi$ exp5ses4 7b7 ,treatm5t ( di/ributions 7#a7 ,am\nts us$ = qualifi$ exp5ses ,any am\nt paid or di/ribut$ out ( a ,high] ,education & ,skills ,obta9m5t ,fund :i* is us$ exclusively to pay qualifi$ exp5ses ( any acc\nt b5efici>y %all n be includible 9 gross income4 7#b7 ,inclusion ( am\nts n us$ = qualifi$ exp5ses ,any am\nt paid or di/ribut$ out ( a ,high] ,education & ,skills ,obta9m5t ,fund :i* is n us$ exclusively to pay ! qualifi$ exp5ses ( ! acc\nt b5efici>y %all be includ$ 9 ! gross income ( su* b5efici>y4 7#c7 ,p5alties = di/ributions n us$ = qualifi$ exp5ses 7,a7 ,p5alties 7i7 ,tax p5alties ,! tax impos$ by ?is *apt] on ! acc\nt b5efici>y = any taxable ye> 9 :i* !re is a paym5t or di/ribution f a ,high] ,education & ,skills ,obta9m5t ,fund ( su* b5efici>y :i* is includible 9 gross income "u p>agraph 7#b7 %all be increas$ by-- 7,i7 9 ! case ( ! fir/ su* paym5t or di/ribution1 #bj p]c5t ( ! am\nt :i* is s includible1 & 7,,ii7 9 ! case ( any subsequ5t su* paym5t or di/ribution1 #ej p]c5t ( ! am\nt :i* is s includible4 7ii7 ,crim9al p5alties ,9 ! case ( ! ?ird paym5t or di/ribution to :i* clause 7i7 applies 7& ea* su* paym5t or di/ribution subsequ5t to su* ?ird paym5t or di/ribution71 9 addition to any p5alty impos$ "u clause 7i71 su* b5efici>y may be imprison$ = up to #a ye> = ea* su* paym5t or di/ribution4 7iii7 ,prior non-qualifi$ di/ributions f ,s*ool ,fre$om ,acc\nt tak5 into acc\nt ,= purposes ( clauses 7i7 & 7ii71 any paym5t or di/ribution f a ,s*ool ,fre$om ,acc\nt to :i* section #ecj;,b7c77#c77;,a77i7 applies %all be treat$ z paym5t or di/ribution to :i* clause 7i7 ( ?is subp>agraph applies if su* ,s*ool ,fre$om ,acc\nt 0 conv]t$ into ! ,high] ,education & ,skills ,obta9m5t ,fund ) respect to :i* clause 7i7 applies4 7,b7 ,exception = di/ribution ( ,p>5tal ,,sfa ,funds ,subp>agraph 7,a7 %all n apply to di/ributions prop]ly attributable 7z det]m9$ "u regulations or o!r guidance issu$ by ! ,secret>y7 to ,p>5tal ,,sfa ,funds transf]r$ to ! ,high] ,education & ,skills ,obta9m5t ,fund "u section #d7;a77#c7 ( ! ,s*ool ,fre$om ,act ( #bjbf4 7,c7 ,exception = ,disability or ,dea? ,subp>agraph 7,a7 %all n apply if ! paym5t or di/ribution is made aft] su* b5efici>y becomes disabl$ )9 ! mean+ ( section #gb7m77#g7 or dies4 7#d7 ,special rule = m9ors ,9 ! case ( any acc\nt b5efici>y :o has n atta9$ age #ah-- 7,a7 p>agraphs 7#b7 & 7#c7 7o!r ?an p>agraph 7#c77;,c77 %all be appli$ by sub/itut+ ! individual :o au?oriz$ su* di/ribution on behalf ( ! acc\nt b5efici>y = su* b5efici>y ea* place x appe>s1 & 7,b7 clauses 7i71 7ii71 & 7iii7 ( p>agraph 7#c77;,a7 %all be appli$ sep>ately ) respect to ea* su* individual :o au?orizes di/ributions on behalf ( an acc\nt b5efici>y4 7#e7 ,treatm5t aft] ,dea? ( ,acc\nt ,b5efici>y 7,a7 ,treatm5t if designat$ b5efici>y is sp\se ,if ! acc\nt b5efici>y's surviv+ sp\se acquires su* b5efici>y's int]e/ 9 a ,high] ,education & ,skills ,obta9m5t ,fund by reason ( be+ ! designat$ b5efici>y ( su* acc\nt at ! dea? ( ! acc\nt b5efici>y1 su* ,high] ,education & ,skills ,obta9m5t ,fund %all be treat$ z if ! sp\se 7 ! acc\nt b5efici>y4 7,b7 ,o!r ,cases 7i7 ,9 g5]al ,if1 by reason ( ! dea? ( ! acc\nt b5efici>y1 any p]son acquires ! acc\nt b5efici>y's int]e/ 9 a ,high] ,education & ,skills ,obta9m5t ,fund 9 a case to :i* subp>agraph 7,a7 does n apply-- 7,i7 su* acc\nt %all cease to be a ,high] ,education & ,skills ,obta9m5t ,fund z ( ! date ( dea?1 & 7,,ii7 an am\nt equal to ! fair m>ket value ( ! assets 9 su* acc\nt on su* date %all be includible if su* p]son is n ! e/ate ( su* b5efici>y1 9 su* p]son's gross income = ! taxable ye> :i* includes su* date1 or if su* p]son is ! e/ate ( su* b5efici>y1 9 su* b5efici>y's gross income = ! la/ taxable ye> ( su* b5efici>y4 7ii7 ,special ,rules 7,i7 ,r$uction ( inclusion = pr$ea? exp5ses ,! am\nt includible 9 gross income "u clause 7i7 by any p]son 7o!r ?an ! e/ate7 %all be r$uc$ by ! am\nt ( qualifi$ exp5ses :i* 7 incurr$ by ! dec$5t be=e ! date ( ! dec$5t's dea? & paid by su* p]son )9 #a ye> aft] su* date4 7,,ii7 ,d$uction = e/ate taxes ,an appropriate d$uction %all be all[$ "u section #fia7;c7 to any p]son 7o!r ?an ! dec$5t or ! dec$5t's sp\se7 ) respect to am\nts includ$ 9 gross income "u clause 7i7 by su* p]son4 7c7 ,def9itions ,= purposes ( ?is section-- 7#a7 ,high] ,education & ,skills ,obta9m5t ,fund ,! t]m ,high] ,education & ,skills ,obta9m5t ,fund means a ,high] ,education & ,skills ,obta9m5t ,fund )9 ! mean+ ( section #d ( ! ,s*ool ,fre$om ,act ( #bjbf4 7#b7 ,qualifi$ exp5ses ,! t]m qualifi$ exp5ses means ! exp5ses describ$ 9 section #d7;c7 ( ! ,s*ool ,fre$om ,act ( #bjbf4 ,any di/ributions return$ to ! ,treasury "u section #d7;e77#a7 ( ,s*ool ,fre$om ,act ( #bjbf %all be treat$ z us$ = qualifi$ exp5ses4 4 7b7 ,d$uction all[$ :e!r or n individual elects ,to itemize d$uctions ,section #fb7;a7 ( su* ,code is am5d$ by ins]t+ aft] p>agraph 7#ba7 ! foll[+ new p>agraph3 7#bb7 ,s*ool ,fre$om ,acc\nts ,! d$uction all[$ by section #ecj;,b7b77#a74 4 7c7 ,cl]ical am5dm5t ,! table ( sections = "p ,,viii ( sub*apt] ,f ( *apt] #a ( su* ,code is am5d$ by add+ at ! end ! foll[+ new items3 ,sec4 #ecj;,b4 ,s*ool ,fre$om ,acc\nts4 ,sec4 #ecj;,c4 ,high] ,education & ,skills ,obta9m5t ,funds4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s end+ aft] ! date ( ! enactm5t ( ?is ,act4 #f4 ,track+ ( ,f$]al education funds ,be=e ! end ( ea* s*ool ye>1 ! ,secret>y ( ! ,treasury %all det]m9e-- 7#a7 ! aggregate am\nt ( deposits made to ,s*ool ,fre$om ,acc\nts "u section #c = su* s*ool ye>1 categoriz$ by-- 7,a7 :e!r su* deposit 0 made by ! ,secret>y ( ! ,treasury1 a p>5t1 or a ,/ate2 & 7,b7 ! local educational ag5cy ( ! acc\nt hold]2 & 7#b7 ( ! am\nts measur$ & categoriz$ "u p>agraph 7#a71 ) respect to ea* local educational ag5cy-- 7,a7 ! am\nt made available to p>5ts 9 accordance ) ! regulations issu$ pursuant to section #c7;e77#a72 & 7,b7 ! am\nt ( funds disburs$ to ! local educational ag5cy 9 accordance ) ! regulations issu$ pursuant to section #c7;e77#a7 & ) section #c7;e77#b74 #g4 ,rule ( con/ruction ,no?+ 9 ?is ,act %all be con/ru$ to-- 7#a7 affect any aspect ( private1 religi\s1 or home education provid]s2 7#b7 exclude private1 religi\s1 or home education provid]s f receiv+ funds f a ,s*ool ,fre$om ,acc\nt2 or 7#c7 require an educational s]vice provid] to alt] any cre$1 practice1 admissions policy1 or curriculum 9 ord] to receive funds f a ,s*ool ,fre$om ,acc\nt4 #h4 ,prohibition on regulations ,except z au?oriz$ by ?is ,act1 ! ,secret>y ( ! ,treasury may n issue any rule1 promulgate any regulation1 or take any o!r action :i* imposes any limitation or requirem5t on ! use ( a ,s*ool ,fre$om ,acc\nt or ,high] ,education & ,skills ,obta9m5t ,fund by a p>5t or eligible individual4 #i4 ,,gao report+ on ,s*ool ,fre$om ,acc\nt & ,high] ,education & ,skills ,obta9m5t ,fund 7a7 ,"o-,"t report ,n lat] ?an #ah mon?s aft] ! date ( enactm5t ( ?is ,act1 ! ,comptroll] ,g5]al ( ! ,unit$ ,/ates %all submit a report to ,congress t conta9s ! foll[+ in=mation3 7#a7 ,a review ( ! w9d-d[n & t]m9ation ( cov]$ ,f$]al education programs by ! ,secret>y ( ,education4 7#b7 ,! reallocation ( unobligat$ am\nts orig9ally appropriat$ = cov]$ ,f$]al education programs to c>ry out ! ,s*ool ,fre$om ,acc\nt program "u section #c1 z requir$ by section #b7;d74 7#c7 ,a summ>y ( ! regulations e/abli%$ by ! ,secret>y ( ! ,treasury "u section #c7;e77#a74 7b7 ,annual report ,n lat] ?an #a ye> aft] ! date ( enactm5t ( ?is ,act1 & annually !reaft]1 ! ,comptroll] ,g5]al ( ! ,unit$ ,/ates %all submit a report to ,congress t conta9s ! foll[+ in=mation3 7#a7 ,! mo/ rec5t annual data collect$ pursuant to section #f4 7#b7 ,an assessm5t ( :e!r any additional uses ( funds = a ,s*ool ,fre$om ,acc\nt or ,high] ,education & ,skills ,obta9m5t ,fund c\ld b5efit ! education ( eligible individuals4 7#c7 ,an analysis ( h[ ! ,secret>y ( ! ,treasury is track+ ,f$]al funds deposit$ into ,s*ool ,fre$om ,acc\nts4 7#d7 ,bas$ on ! mo/ rec5t data available at ! "t su* report is submitt$1 & to ! ext5t su* data is available-- 7,a7 ! annual numb] ( /ud5ts :o exp5d$ funds f a ,s*ool ,fre$om ,acc\nt to-- 7i7 att5d a private s*ool2 7ii7 att5d a public *>t] s*ool2 7iii7 att5d a homes*ool2 or 7iv7 att5d educational classes outside ! home1 includ+ z "p ( a micro s*ool or le>n+ pod2 7,b7 ! aggregate annual am\nt ( funds exp5d$ by p>5ts f ,s*ool ,fre$om ,acc\nts = a purpose o!r ?an an eligible uses "u section #c7;f77#a72 7,c7 ! aggregate am\nt ( funds 9 ,s*ool ,fre$om ,acc\nts t roll$ ov] to ! subsequ5t s*ool ye>2 7,d7 ! numb] ( ,s*ool ,fre$om ,acc\nts t conv]t$ to ,high] ,education & ,skills ,obta9m5t ,funds & ! aggregate am\nt 9 acc\nts t conv]t$2 7,e7 ! aggregate numb] ( eligible individual :o exp5d am\nts f a ,high] ,education & ,skills ,obta9m5t ,fund to pay co/s associat$ ) att5dance ( an in/itution ( high] education or t[>ds c>e] & te*nical education2 & 7,f7 ! aggregate annual am\nt ( funds f ,high] ,education & ,skills ,obta9m5t ,funds t 7 return$ to ! ,treasury4 7#e7 ,any o!r in=mation ! ,comptroll] ,g5]al det]m9es important to assess+ & improv+ ! implem5tation or adm9i/ration ( ! ,s*ool ,fre$om ,acc\nt program or ! ,high] ,education & ,skills ,obta9m5t ,fund program4 #aj4 ,def9itions ,9 ?is ,act3 7#a7 ,c>e] & te*nical education ,! t]m c>e] & te*nical education has ! mean+ giv5 t t]m 9 section #c ( ! ,c>l ,d4 ,p]k9s ,c>e] & ,te*nical ,education ,act ( #bjjf 7#bj ,u4,s4,c4 #bcjb74 7#b7 ,*ild ) a disability ,! t]m *ild ) a disability has ! mean+ giv5 t t]m 9 section #fjb ( ! ,individuals ) ,disabilities ,education ,act 7#bj ,u4,s4,c4 #adja74 7#c7 ,co/ ( att5dance ,! t]m co/ ( att5dance has ! mean+ giv5 t t]m 9 section #dgb ( ! ,high] ,education ,act ( #aife 7#bj ,u4,s4,c4 #ajhgll74 7#d7 ,cov]$ ,f$]al education program ,! t]m cov]$ ,f$]al education program means an applicable program 7z def9$ 9 section #djj ( ! ,g5]al ,education ,provisions ,act 7#bj ,u4,s4,c4 #abba77 ! prim>y purpose ( :i* is to support elem5t>y or second>y education1 except su* t]m does n include ! ,s*ool ,fre$om ,acc\nt program au?oriz$ "u ?is ,act4 7#e7 ,eligible individual ,! t]m eligible individual means1 ) respect to a ,s*ool ,fre$om ,acc\nt1 an individual :o-- 7,a7 has n complet$ second>y s*ool2 7,b7 is or w become eligible to att5d a elem5t>y or second>y s*ool2 7,c7 is a citiz5 or national ( ! ,unit$ ,/ates2 & 7,d7 has at lea/ #a p>5t t is a citiz5 or national ( ! ,unit$ ,/ates4 7#f7 ,,esea t]ms ,! t]ms *ild1 elem5t>y s*ool1 local educational ag5cy1 p>5t1 second>y s*ool1 & ,/ate h ! mean+s giv5 ^? t]ms 9 section #haja ( ! ,elem5t>y & ,second>y ,education ,act ( #aife 7#bj ,u4,s4,c4 #ghja74 7#g7 ,in/itution ( high] education ,! t]m in/itution ( high] education has ! mean+ giv5 t t]m 9 section #ajb ( ! ,high] ,education ,act ( #aife 7#bj ,u4,s4,c4 #ajjb74