I.R.C. § 529(a) General Rule —
A qualified tuition program shall be exempt from taxation under this subtitle. Notwithstanding
the preceding sentence, such program shall be subject to the taxes imposed by section
511 (relating to imposition of tax on unrelated business income of charitable organizations).
I.R.C. § 529(b) Qualified Tuition Program —
For purposes of this section—
I.R.C. § 529(b)(1) In General —
The term “qualified tuition program” means a program established and
maintained by a State or agency or instrumentality thereof or by 1 or more eligible
educational institutions—
I.R.C. § 529(b)(1)(A) —
under which a person—
I.R.C. § 529(b)(1)(A)(i) —
may purchase tuition credits or certificates on behalf of a designated beneficiary
which entitle the beneficiary to the waiver or payment of qualified higher education
expenses of the beneficiary, or
I.R.C. § 529(b)(1)(A)(ii) —
in the case of a program established and maintained by a State or agency or instrumentality
thereof, may make contributions to an account which is established for the purpose
of meeting the qualified higher education expenses of the designated beneficiary
of the account, and
I.R.C. § 529(b)(1)(B) —
which meets the other requirements of this subsection.
Except to the extent provided in
regulations, a program established and maintained by 1 or more eligible
educational institutions shall not be treated as a qualified tuition
program unless such program provides that amounts are held in a qualified
trust and such program has received a ruling or determination that such program meets
the applicable requirements for a qualified tuition program. For purposes of the
preceding sentence, the term “qualified trust” means a trust which is
created or organized in the United States for the exclusive benefit of designated
beneficiaries and with respect to which the requirements of paragraphs (2) and (5)
of section 408(a) are
met.
I.R.C. § 529(b)(2) Cash Contributions —
A program shall not be treated as a qualified tuition program unless it provides
that purchases or contributions may only be made in cash.
I.R.C. § 529(b)(3) Separate Accounting —
A program shall not be treated as a qualified tuition program unless it provides
separate accounting for each designated beneficiary.
I.R.C. § 529(b)(4) Limited Investment Direction —
A program shall not be treated as a qualified tuition program unless it provides
that any contributor to, or designated beneficiary under, such program may, directly
or indirectly, direct the investment of any contributions to the program (or any earnings
thereon) no more than 2 times in any calendar year.
I.R.C. § 529(b)(5) No Pledging Of Interest As Security —
A program shall not be treated as a qualified tuition program if it allows any interest
in the program or any portion thereof to be used as security for a loan.
I.R.C. § 529(b)(6) Prohibition On Excess Contributions —
A program shall not be treated as a qualified tuition program unless it provides
adequate safeguards to prevent contributions on behalf of a designated beneficiary
in excess of those necessary to provide for the qualified higher education expenses
of the beneficiary.
I.R.C. § 529(c) Tax Treatment Of Designated Beneficiaries And Contributors
I.R.C. § 529(c)(1) In General —
Except as otherwise provided in this subsection, no amount shall be includible in
gross income of—
I.R.C. § 529(c)(1)(A) —
a designated beneficiary under a qualified tuition program, or
I.R.C. § 529(c)(1)(B) —
a contributor to such program on behalf of a designated beneficiary,
with respect to any distribution or earnings under such
program.
I.R.C. § 529(c)(2) Gift Tax Treatment Of Contributions —
For purposes of chapters 12 and 13—
I.R.C. § 529(c)(2)(A) In General —
Any contribution to a qualified tuition program on behalf of any designated beneficiary—
I.R.C. § 529(c)(2)(A)(i) —
shall be treated as a completed gift to such beneficiary which is not a future interest
in property, and
I.R.C. § 529(c)(2)(A)(ii) —
shall not be treated as a qualified transfer under section 2503(e).
I.R.C. § 529(c)(2)(B) Treatment Of Excess Contributions —
If the aggregate amount of contributions described in subparagraph (A) during the
calendar year by a donor exceeds the limitation for such year under section 2503(b), such aggregate amount shall, at the election of the donor, be taken into account
for purposes of such section ratably over the 5-year period beginning with such calendar
year.
I.R.C. § 529(c)(3) Distributions
I.R.C. § 529(c)(3)(A) In General —
Any distribution under a qualified tuition program shall be includible in the gross
income of the distributee in the manner as provided under section 72 to the extent
not excluded from gross income under any other provision of this chapter.
I.R.C. § 529(c)(3)(B) Distributions For Qualified Higher Education Expenses —
For purposes of this paragraph—
I.R.C. § 529(c)(3)(B)(i) In-Kind Distributions —
No amount shall be includible in gross income under subparagraph (A) by reason of
a distribution which consists of providing a benefit to the distributee which, if
paid for by the distributee, would constitute payment of a qualified higher education
expense.
I.R.C. § 529(c)(3)(B)(ii) Cash Distributions —
In the case of distributions not described in clause
(i), if—
I.R.C. § 529(c)(3)(B)(ii)(I) —
such distributions do not exceed the qualified higher education expenses (reduced
by expenses described in clause (i)), no amount shall be includible in gross income,
and
I.R.C. § 529(c)(3)(B)(ii)(II) —
in any other case, the amount otherwise includible in gross income shall be reduced
by an amount which bears the same ratio to such amount as such expenses bear to such
distributions.
I.R.C. § 529(c)(3)(B)(iii) Exception For Institutional Programs —
In the case of any taxable year beginning before January 1, 2004, clauses (i) and
(ii) shall not apply with respect to any distribution during such taxable year under
a qualified tuition program established and maintained by 1 or more eligible educational
institutions.
I.R.C. § 529(c)(3)(B)(iv) Treatment As Distributions —
Any benefit furnished to a designated beneficiary under a qualified tuition program
shall be treated as a distribution to the beneficiary for purposes of this paragraph.
I.R.C. § 529(c)(3)(B)(v) Coordination With American Opportunity And Lifetime Learning Credits —
The total amount of qualified higher education expenses with respect to an individual
for the taxable year shall be reduced—
I.R.C. § 529(c)(3)(B)(v)(I) —
as provided in section 25A(g)(2), and
I.R.C. § 529(c)(3)(B)(v)(II) —
by the amount of such expenses which were taken into account in determining the credit
allowed to the taxpayer or any other person under section 25A.
I.R.C. § 529(c)(3)(B)(vi) Coordination With Coverdell Education Savings Accounts —
If, with respect to an individual for any taxable year—
I.R.C. § 529(c)(3)(B)(vi)(I) —
the aggregate distributions to which clauses (i) and (ii) and section 530(d)(2)(A) apply, exceed
I.R.C. § 529(c)(3)(B)(vi)(II) —
the total amount of qualified higher education expenses otherwise taken into account
under clauses (i)
and (ii) (after the application of clause (v)) for such year,
the taxpayer shall allocate such
expenses among such distributions for purposes of determining the amount of the exclusion
under clauses (i) and (ii) and section 530(d)(2)(A).
I.R.C. § 529(c)(3)(C) Change In Beneficiaries Or Programs
I.R.C. § 529(c)(3)(C)(i) Rollovers —
Subparagraph (A) shall not apply to that portion of any distribution which, within
60 days of such distribution, is transferred—
I.R.C. § 529(c)(3)(C)(i)(I) —
to another qualified tuition program for the benefit of the designated beneficiary,
I.R.C. § 529(c)(3)(C)(i)(II) —
to the credit of another designated beneficiary under a qualified tuition program
who is a member of the family of the designated beneficiary with respect to which
the distribution was made, or
I.R.C. § 529(c)(3)(C)(i)(III) —
before January 1, 2026, to an ABLE account (as defined in section 529A(e)(6)) of the designated beneficiary or a member of the family of the designated beneficiary.
Subclause (III) shall not apply to so much of a distribution which, when added to
all other contributions made to the ABLE account for the taxable year, exceeds the
limitation under section 529A(b)(2)(B)(i).
I.R.C. § 529(c)(3)(C)(ii) Change In Designated Beneficiaries —
Any change in the designated beneficiary of an interest in a qualified tuition program
shall not be treated as a distribution for purposes of subparagraph (A) if the new
beneficiary is a member of the family of the old beneficiary.
I.R.C. § 529(c)(3)(C)(iii) Limitation On Certain Rollovers —
Clause (i)(I) shall not apply to any transfer if such transfer occurs within 12
months from the date of a previous transfer to any qualified tuition program for
the benefit of the designated
beneficiary.
I.R.C. § 529(c)(3)(D) Special Rule For Contributions Of Refunded Amounts —
In the case of a beneficiary who receives a refund of any qualified higher education
expenses from an eligible educational institution, subparagraph (A) shall not apply
to that portion of any distribution for the taxable year which is recontributed to
a qualified tuition program of which such individual is a beneficiary, but only to
the extent such recontribution is made not later than 60 days after the date of such
refund and does not exceed the refunded amount.
I.R.C. § 529(c)(4) Estate Tax Treatment
I.R.C. § 529(c)(4)(A) In General —
No amount shall be includible in the gross estate of any individual for purposes
of chapter 11 by reason of an interest in a qualified tuition program.
I.R.C. § 529(c)(4)(B) Amounts Includible In Estate Of Designated Beneficiary In Certain Cases —
Subparagraph (A) shall not apply to amounts distributed on account of the death of
a beneficiary.
I.R.C. § 529(c)(4)(C) Amounts Includible In Estate Of Donor Making Excess Contributions —
In the case of a donor who makes the election described in paragraph (2)(B) and
who dies before the close of the 5-year period referred to in such paragraph, notwithstanding
subparagraph (A), the gross estate of the donor shall include the portion of such
contributions properly allocable to periods after the date of death of the donor.
I.R.C. § 529(c)(5) Other Gift Tax Rules —
For purposes of chapters 12 and 13—
I.R.C. § 529(c)(5)(A) Treatment Of Distributions —
Except as provided in subparagraph (B), in no event shall a distribution from a
qualified tuition program be treated as a taxable gift.
I.R.C. § 529(c)(5)(B) Treatment Of Designation Of New Beneficiary —
The taxes imposed by chapters 12 and 13 shall apply to a transfer by reason of a
change in the designated beneficiary under the program (or a rollover to the account
of a new beneficiary)
unless the new beneficiary is—
I.R.C. § 529(c)(5)(B)(i) —
assigned to the same generation as
(or a higher generation than) the old beneficiary (determined in accordance with
section 2651), and
I.R.C. § 529(c)(5)(B)(ii) —
a member of the family of the old
beneficiary.
I.R.C. § 529(c)(6) Additional Tax —
The tax imposed by section 530(d)(4) shall apply to any payment or distribution from a qualified tuition program in the
same manner as such tax applies to a payment or distribution from a Coverdell education
savings account. This paragraph shall not apply to any payment or distribution in
any taxable year beginning before January 1, 2004, which is includible in gross income
but used for qualified higher education expenses of the designated beneficiary.
I.R.C. § 529(c)(7) Treatment Of Elementary And Secondary Tuition —
Any reference in this subsection to the term “qualified higher education expense”
shall include a reference to expenses for tuition in connection with enrollment or
attendance at an elementary or secondary public, private, or religious school.
I.R.C. § 529(c)(8) Treatment Of Certain Expenses Associated With Registered Apprenticeship Programs —
Any reference in this subsection to the term “qualified higher education expense”
shall include a reference to expenses for fees, books, supplies, and equipment required
for the participation of a designated beneficiary in an apprenticeship program registered
and certified with the Secretary of Labor under section 1 of the National Apprenticeship
Act 2 (29 U.S.C. 50).”
I.R.C. § 529(c)(9) Treatment Of Qualified Education Loan Repayments
I.R.C. § 529(c)(9)(A) In General —
Any reference in this subsection to the term “qualified higher education expense”
shall include a reference to amounts paid as principal or interest on any qualified
education loan (as defined in section 221(d))
of the designated beneficiary or a sibling of the designated beneficiary.
I.R.C. § 529(c)(9)(B) Limitation —
The amount of distributions treated as a qualified higher education expense under
this paragraph with respect to the loans of any individual shall not exceed $10,000
(reduced by the amount of distributions so treated for all prior taxable years).
I.R.C. § 529(c)(9)(C) Special Rules For Siblings Of The Designated Beneficiary
I.R.C. § 529(c)(9)(C)(i) Separate Accounting —
For purposes of subparagraph (B) and subsection (d), amounts treated as a qualified higher education expense with respect to the loans
of a sibling of the designated beneficiary shall be taken into account with respect
to such sibling and not with respect to such designated beneficiary.
I.R.C. § 529(c)(9)(C)(ii) Sibling Defined —
For purposes of this paragraph, the term “sibling”
means an individual who bears a relationship to the designated beneficiary which is
described in section 152(d)(2)(B).
I.R.C. § 529(d) Reports —
Each officer or employee having control of the qualified tuition program or their
designee shall make such reports regarding such program to the Secretary and to designated
beneficiaries with respect to contributions, distributions, and such other matters
as the Secretary may require. The reports required by this subsection shall be filed
at such time and in such manner and furnished to such individuals at such time and
in such manner as may be required by the Secretary.
I.R.C. § 529(e) Other Definitions And Special Rules —
For purposes of this section—
I.R.C. § 529(e)(1) Designated Beneficiary —
The term “designated beneficiary” means—
I.R.C. § 529(e)(1)(A) —
the individual designated at the commencement of participation in the qualified
tuition program as the beneficiary of amounts paid (or to be paid) to the program,
I.R.C. § 529(e)(1)(B) —
in the case of a change in beneficiaries described in subsection (c)(3)(C), the
individual who is the new beneficiary, and
I.R.C. § 529(e)(1)(C) —
in the case of an interest in a qualified tuition program purchased by a State or
local government (or agency or instrumentality thereof) or an organization described
in section 501(c)(3) and exempt from taxation under section 501(a) as part of a scholarship program operated by such government or organization, the
individual receiving such interest as a scholarship.
I.R.C. § 529(e)(2) Member Of Family —
The term “member of the family” means, with respect to any designated
beneficiary—
I.R.C. § 529(e)(2)(A) —
the spouse of such beneficiary;
I.R.C. § 529(e)(2)(B) —
an individual who bears a relationship to such beneficiary which is described in
subparagraphs (A) through
(G) of section 152(d)(2);
I.R.C. § 529(e)(2)(C) —
the spouse of any individual described in subparagraph (B); and
I.R.C. § 529(e)(2)(D) —
any first cousin of such beneficiary.
I.R.C. § 529(e)(3) Qualified Higher Education Expenses —
I.R.C. § 529(e)(3)(A) In General —
The term “qualified higher education expenses” means—
I.R.C. § 529(e)(3)(A)(i) —
tuition, fees, books, supplies, and equipment required for the enrollment or attendance
of a designated beneficiary at an eligible educational institution,
I.R.C. § 529(e)(3)(A)(ii) —
expenses for special needs services in the case of a special needs beneficiary which
are incurred in connection with such enrollment or attendance, and
I.R.C. § 529(e)(3)(A)(iii) —
expenses for the purchase of computer or peripheral equipment
(as defined in section 168(i)(2)(B)), computer software (as defined in section 197(e)(3)(B)), or Internet access and related services, if such equipment, software, or services
are to be used primarily by the beneficiary during any of the years the beneficiary
is enrolled at an eligible educational institution.
Clause (iii) shall not include expenses for computer software designed for sports,
games, or hobbies unless the software is predominantly educational in nature. The
amount of cash distributions from all qualified tuition programs described in subsection
(b)(1)(A)(ii)
with respect to a beneficiary during any taxable year shall, in the aggregate, include
not more than $10,000 in expenses described in subsection (c)(7) incurred during the
taxable year.
I.R.C. § 529(e)(3)(B) Room And Board Included For Students Who Are At Least Half-Time
I.R.C. § 529(e)(3)(B)(i) In General —
In the case of an individual who is an eligible student
(as defined in section 25A(b)(3))
for any academic period, such term shall also include reasonable costs for such period
(as determined under the qualified tuition program) incurred by the designated beneficiary
for room and board
while attending such institution. For purposes of subsection (b)(6), a designated
beneficiary shall be treated as meeting the requirements of this clause.
I.R.C. § 529(e)(3)(B)(ii) Limitation —
The amount treated as qualified higher education expenses by reason of clause (i)
shall not exceed—
I.R.C. § 529(e)(3)(B)(ii)(I) —
the allowance (applicable to the student) for room and board included in the cost
of attendance (as defined in section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll), as in effect on the date of the enactment of the Economic Growth and Tax Relief
Reconciliation Act of 2001) as determined by the eligible educational institution
for such period, or
I.R.C. § 529(e)(3)(B)(ii)(II) —
if greater, the actual invoice amount the student residing in housing owned or operated
by the eligible educational institution is charged by such institution for room and
board costs for such period.
I.R.C. § 529(e)(4) Application Of Section 514 —
An interest in a qualified tuition program shall not be treated as debt for purposes
of section 514.
I.R.C. § 529(e)(5) Eligible Educational Institution —
The term “eligible educational institution”
means an institution—
I.R.C. § 529(e)(5)(A) —
which is described in section 481 of the Higher Education Act of 1965 (20
U.S.C. 1088), as in effect on the date of the enactment of this paragraph, and
I.R.C. § 529(e)(5)(B) —
which is eligible to participate in a program under title IV of such Act.
I.R.C. § 529(f) Regulations —
Notwithstanding any other provision of this section, the Secretary shall prescribe
such regulations as may be necessary or appropriate to carry out the purposes of
this section and to prevent abuse of such purposes, including regulations under chapters
11, 12, and 13 of this title.
(Aug. 20, 1996, Pub. L. 104-188, title I, Sec. 1806(a), 110 Stat. 1755; Pub. L. 105-34, title II, XVI, Sec. 211, 1601(h)(1), Aug. 5, 1997, 111 Stat 788; Pub. L. 105-206, title VI, Sec. 6004(c), July 22, 1998, 112 Stat 685; Pub. L. 106-554, title III, Sec. 319, Dec. 21, 2000,
114 Stat. 2763; Pub. L. 107-16, title IV, Sec. 402, June 7, 2001, 115 Stat. 38; Pub. L. 107-22, Sec. 1, July 26, 2001, 115 Stat. 196; Pub. L. 107-147, title IV, Sec. 417(11), Mar. 9, 2002, 116 Stat. 21; Pub. L. 108-311, title II, IV, Sec. 207(21), 406(a), Oct. 4, 2004, 118 Stat. 1166; Pub. L. 109-135, title IV, Sec. 412, Dec. 21, 2005, 119 Stat. 2577; Pub.
L. 109-280, title XIII, Sec. 1304(b), Aug. 17, 2006, 120 Stat. 780; Pub. L. 111-5, div. B, title I, Sec. 1005(a), Feb. 17, 2009, 123 Stat. 115; Pub. L. 113-295, Div. B, Sec. 105(a), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 114-113, Div. Q, title III, Sec. 302; Pub. L. 115-97, title I, Sec. 11025(a), 11032(a), Dec. 22, 2017, 131 Stat. 2054; Pub. L. 115-141, Div. U, title I, Sec. 101(l)(15), title IV, Sec. 401(a)(127), (128); Pub. L. 115-141, Div. U, title IV, Sec. 401(a)(127)-(128), Mar. 23, 2018, 132 Stat. 348; Pub. L. 116-94, Div. O, title III, Sec. 302(a), (b)(1), Dec. 20, 2019.)
BACKGROUND NOTES
Amendments to Part
2001-Pub. L. 107-16, Sec. 402(a)(4)(D), amended the heading of Part VIII by striking “State”.
1997--Pub. L. 105-34, Sec. 211(e)(1) amended the heading of Part VIII. Prior to amendment it read as: “Qualified
State Tuition Programs”.
1996--Pub. L. 104-188, title I, Subtitle H, 1806(a), Aug. 20, 1996, added Part VIII.
AMENDMENTS
2019 -
Subsec. (c)(8), (9). Pub. L. 116-94, Div. O, Sec. 302(a), (b)(1), amended subsec. (c) by adding new par.
(8) and (9).
2018--Subsec.(c)(6). Pub. L. 115-141, Div. U, Sec. 401(a)(127), amended par. (6) by substituting “a Coverdell”
for “an Coverdell”.
Subsec. (c)(3)(B)(v). Pub. L. 115-141, Div. U, Sec. 101(l)(15), amended the heading of clause (v) by substituting “American
Opportunity” for “Hope”.
Subsec. (e)(3)(A)(i). Pub. L. 115-141, Div. U, Sec. 401(a)(128)(A), amended clause
(i) by substituting a comma for the semicolon at the end.
Subsec. (e)(3)(A)(ii). Pub. L. 115-141, Div. U, Sec. 401(a)(128)(B), amended clause
(ii) by adding “, and” at the end.
2017 - Subsec. (c)(3)(C)(i). Pub. L. 115-97, Sec. 11025(a), amended clause (i) by striking “or” at the end of subclause
(I), by substituting “, or” for the period at the end of subclause (II),
by adding new subclause (III), and by adding the sentence at the end.
Subsec. (c)(7). Pub. L. 115-97, Sec. 11032(a)(1), amended subsec. (c) by adding par. (7).
Subsec. (e)(3)(A). Pub. L. 115-97, Sec. 11032(a)(2), amended par. (A) by adding the sentence at the end.
2015 - Subsec. (c)(3)(D). Pub. L. 114-113, Div. Q, Sec. 302(b)(1), amended par. (3) by striking subpar. (D). Before being struck,
it read as follows:
“(D) Operating Rules.—For purposes of applying section 72—
“(i) to the extent provided by the Secretary, all qualified tuition programs
of which an individual is a designated beneficiary shall be treated as one program,
“(ii) except to the extent provided by the Secretary, all distributions during
a taxable year shall be treated as one distribution, and
“(iii) except to the extent provided by the Secretary, the value of the contract,
income on the contract, and investment in the contract shall be computed as of the
close of the calendar year in which the taxable year begins.”
Subsec. (c)(3)(D). Pub. L. 114-113, Div Q, Sec. 302(c)(1), amended par. (3) by adding a new subpar. (D).
Subsec. (e)(3)(A)(iii). Pub. L. 114-113, Div. Q, Sec. 302(a), amended clause (iii). Before amendment, it read as follows:
“(iii) expenses paid or incurred in 2009 or 2010 for the purchase of any computer
technology or equipment (as defined in section 170(e)(6)(F)(i)) or Internet access
and related services, if such technology, equipment, or services are to be used by
the beneficiary and the beneficiary's family during any of the years the beneficiary
is enrolled at an eligible educational institution.”
2014 - Subsec. (b)(4). Pub. L. 113-295, Div. B, Sec. 105(a), amended par. (4) by substituting “No” for “Limited”
in the heading and by substituting “may, directly or indirectly, direct the
investment of any contributions to the program (or any earnings thereon) no more than
2 times in any calendar year”
for “may not directly or indirectly direct the investment of any contributions
to the program (or any earnings thereon).”
2009 - Subsec. (e)(3)(A)(i)-(iii). Pub. L. 111-5, Div. B, Sec. 1005(a), amended subpar. (A) by striking “and” at the end
of clause
(i), by striking the period at the end of clause (ii), and by adding clause (iii)
and the flush material at the end.
2006 - Subsec. (f). Pub. L. 109-280, Sec. 1304(b), added subsec. (f).
2005 - Subsec. (c)(6). Pub. L. 109-135, Sec. 412(ee)(3), amended par. (6) by substituting “Coverdell education savings account"
for “education individual retirement account”.
2004 - Subsec. (c)(5)(B). Pub. L. 108-311, Sec. 406(a), amended subpar. (B). Before amendment it read as follows:
“(B) Treatment of designation of new beneficiary.--
“The taxes imposed by chapters 12 and 13 shall apply to a transfer by reason
of a change in the designated beneficiary under the program (or a rollover to the
account of a new beneficiary)
only if the new beneficiary is a generation below the generation of the old beneficiary
(determined in accordance with section 2651).”
Subsec. (e)(2)(B). Pub. L. 108-311, Sec. 207(21), amended subpar. (B) by substituting “subparagraphs (A) through (G)
of section 152(d)(2)” for “paragraphs (1) through (8) of section 152(a)”.
2002 - Subsec. (e)(3)(B)(i). Pub. L. 107-147, Sec. 417(11), amended clause (i) by substituting “subsection (b)(6)” for “subsection
(b)(7)”.
2001 - Subsec. (c)(3)(B)(vi). Pub. L. 107-22, Sec. 1(b)(3)(C), amended the heading of clause (vi) by substituting “Coverdell education savings”
for “education individual retirement”.
Section 529. Pub. L. 107-16, Sec. 402(a)(4)(D), amended the heading of Sec. 529 by striking “State”.
Sec. 529. Pub. L. 107-16, Sec. 402(a)(4)(A), amended sec. 529 by substituting “qualified tuition” for “qualified
State tuition” each place it appeared.
Subsec. (b). Pub. L. 107-16, Sec. 402(a)(4)(C), amended the heading of subsec. (b) by substituting “qualified tuition"
for “qualified State tuition”.
Subsec. (b)(1). Pub. L. 107-16, Sec. 402(a)(1), amended par. (1) by inserting “or by 1 or more eligible educational institutions”
after “maintained by a State or agency or instrumentality thereof ‘’
in the matter preceding subparagraph (A), and by adding at the flush sentence at the
end.
Subsec. (b)(1)(A)(ii). Pub. L. 107-16, Sec. 402(a)(2), amended clause (ii) by inserting “in the case of a program established and
maintained by a State or agency or instrumentality thereof,”
before “may make”.
Subsec. (b)(3). Pub. L. 107-16, Sec. 402(a)(3)(A), struck par. (3). Before being struck it read as follows:
“(3) Refunds
“A program shall not be treated as a qualified State tuition program unless
it imposes a more than de minimis penalty on any refund of earnings from the account
which are not--
“(A) used for qualified higher education expenses of the designated beneficiary,
“(B) made on account of the death or disability of the designated beneficiary,
or
“(C) made on account of a scholarship
(or allowance or payment described in section 135(d)(1)(B) or (C))
received by the designated beneficiary to the extent the amount of the refund does
not exceed the amount of the scholarship, allowance, or payment.”
Subsec. (b)(4)-(7). Pub. L. 107-16, Sec. 402(a)(3)(A), redesignated par. (4)-(7) as par. (3)-(6), respectively.
Subsec. (c)(3)(B). Pub. L. 107-16, Sec. 402(b)(1), amended subpar. (B). Before amendment it read as follows:
“(B) In-kind distributions
“Any benefit furnished to a designated beneficiary under a qualified tuition
program shall be treated as a distribution to the beneficiary.”
Subsec. (c)(3)(C). Pub. L. 107-16, Sec. 402(c)(3), amended the heading of subpar. (C) by inserting “or programs” after
“beneficiaries”.
Subsec. (c)(3)(C)(i). Pub. L. 107-16, Sec. 402(c)(1), amended clause (i) by substituting “transferred-
“(I) to another qualified tuition program for the benefit of the designated
beneficiary, or
“(II) to the credit”
for “transferred to the credit”.
Subsec. (c)(3)(C)(iii). Pub. L. 107-16, Sec. 402(c)(2), added clause (iii).
Subsec. (c)(3)(D)(ii). Pub. L. 107-16, Sec. 402(g)(1), amended clause (ii) by inserting “except to the extent provided by the Secretary,”
before “all distributions.
Subsec. (c)(3)(D)(iii). Pub. L. 107-16, Sec. 402(g)(2), amended clause (iii) by inserting “except to the extent provided by the Secretary,”
before “the value”.
Subsec. (c)(6). Pub. L. 107-16, Sec. 402(a)(3)(B), added par. (6).
Subsec. (e)(2)(B)-(D). Pub. L. 107-16, Sec. 402(d), struck “and” at the end of subpar. (B), substituted “; and”
for the period at the end of subpar. (C), and added subpar. (D).
Subsec. (e)(3)(A). Pub. L. 107-16, Sec. 402(f), amended subpar. (A). Before amendment it read as follows:
“(A) In general.--The term ‘qualified higher education expenses’
means tuition, fees, books, supplies, and equipment required for the enrollment or
attendance of a designated beneficiary at an eligible educational institution.”
Subsec. (e)(3)(B)(ii). Pub. L. 107-16, Sec. 402(e), amended clause (ii). Before amendment it read as follows:
“(ii) Limitation.--The amount treated as qualified higher education expenses
by reason of the preceding sentence shall not exceed the minimum amount (applicable
to the student)
included for room and board for such period in the cost of attendance
(as defined in section 472 of the Higher Education Act of 1965, 20 U.S.C. 1087ll, as in effect on the date of the enactment of this paragraph) for the eligible educational
institution for such period.”
2000 - Subsec. (e)(3)(B). Pub. L. 106-554, Sec. 319(5), amended the heading by striking “under guaranteed plans” after “students”.
1998 - Subsec. (c)(3)(A). Pub. L. 105-206, Sec. 6004(c)(2), amended subpar. (A) by substituting “section 72” for “section
72(b)”.
Subsec. (e)(2). Pub. L. 105-206, Sec. 6004(c)(3), amended par. (2). Prior to amendment it read as follows:
“(2) Member of family.--
The term ‘member of the family’ means--
“(A) an individual who bears a relationship to another individual which is
a relationship described in paragraphs (1) through (8) of section 152(a), and
“(B) the spouse of any individual described in subparagraph (A).”
1997 - Subsec. (b)(5). Pub. L. 105-34, Sec. 211(b)(4), amended par. (5) by inserting “directly or indirectly” after “may
not”.
Subsec. (c)(2). Pub. L. 105-34, Sec. 211(b)(3)(A)(i), amended par. (2). Prior to amendment it read as follows:
“(2) Contributions
In no event shall a contribution to a qualified State tuition program on behalf of
a designated beneficiary be treated as a taxable gift for purposes of chapter 12.”
Subsec. (c)(3)(A). Pub. L. 105-34, Sec. 211(d), amended subpar. (A) by substituting “section 72(b)” for “section
72”.
Subsec. (c)(4). Pub. L. 105-34, Sec. 211(b)(3)(b),
amended par. (4). Prior to amendment it read as follows:
“(4) Estate tax inclusion
The value of any interest in any qualified State tuition program which is attributable
to contributions made by an individual to such program on behalf of any designated
beneficiary shall be includible in the gross estate of the contributor for purposes
of chapter 11.”
Subsec.. (c)(5). Pub. L. 105-34, Sec. 211(b)(3)(A)(ii), amended par. (5). Prior to amendment it read as follows:
“(5) Special rule for applying section 2503(e)
For purposes of section 2503(e), the waiver (or payment to an educational institution)
of qualified higher education expenses of a designated beneficiary under a qualified
State tuition program shall be treated as a qualified transfer.”
Subsec. (d). Pub. L. 105-34, Sec. 211(e)(2)(A),
amended subsec (d). Prior to amendment it read as follows:
“(d) Reporting Requirements
(1) In general
If there is a distribution to any individual with respect to an interest in a qualified
State tuition program during any calendar year, each officer or employee having control
of the qualified State tuition program or their designee shall make such reports as
the Secretary may require regarding such distribution to the Secretary and to the
designated beneficiary or the individual to whom the distribution was made. Any such
report shall include such information as the Secretary may prescribe.
(2) Timing of reports
Any report required by this subsection--
(A) shall be filed at such time and in such matter as the Secretary prescribes, and
(B) shall be furnished to individuals not later than January 31 of the calendar year
following the calendar year to which such report relates.”
Subsec. (e)(1)(B). Pub. L. 105-34, Sec. 1601(h)(1)(A), amended subpar. (B) by substituting “subsection (c)(3)(C)” for “subsection
(c)(2)(C)”.
Subsec. (e)(1)(C). Pub. L. 105-34, Sec. 1601(h)(1)(B), amended subpar. (C) by inserting “(or agency or instrumentality thereof)"
after “local government”.
Subsec. (e)(2). Pub. L. 105-34, Sec. 211(b)(1), amended par. (2). Prior to amendment it read as follows:
“(2) Member of family
The term ‘member of the family’ has the same meaning given such term as
section 2032A(e)(2).”
Subsec. (e)(3). Pub. L. 105-34, Sec. 211(a), amended par. (3). Prior to amendment it read as follows:
“(3) Qualified higher education expenses
The term ‘qualified higher education expenses’
means tuition, fees, books, supplies, and equipment required for the enrollment or
attendance of a designated beneficiary at an eligible educational institution (as
defined in section 135(c)(3)).”
Subsec. (e)(5). Pub. L. 105-34, Sec. 211(b)(2), added par. (5).
EFFECTIVE DATE OF 2019 AMENDMENTS
Amendments by Pub. L. 116-94, Div. O, Sec. 302(a), (b)(1), applicable to distributions made after December 31,
2018.
EFFECTIVE DATE OF 2018 AMENDMENTS
Amendment by Pub. L. 115-141, Div. U, Sec. 401(a)(127), effective March 23, 2018.
Amendment by Pub. L. 115-141, Div. U, Sec. 401(a)(128), effective March 23, 2018.
Amendment by Pub. L. 115-141, Div. U, Sec. 101(l)(15), effective as if included in the provision of Protecting
Americans from Tax Hikes Act of 2015
[Pub. L. 114-113] to which it relates.
Amendments by Pub. L. 115-141, Div. U, Sec. 401(a), effective March 23, 2018.
EFFECTIVE DATE OF 2017 AMENDMENTS
Amendments by Pub. L. 115-97, Sec. 11025(a), effective for distributions after the date of the enactment of this Act [Enacted:
Dec. 22, 2017].
Amendments by Pub. L. 115-97, Sec. 11032(a), effective for distributions made after December 31, 2017.
EFFECTIVE DATE OF 2015 AMENDMENTS
Amendment by Pub. L. 114-113, Div. Q, Sec. 302(b)(1), effective for distributions after December 31, 2014.
Amendment by Pub. L. 114-113, Div. Q, Sec. 302(c)(1), effective with respect to refunds of qualified higher education
expenses after December 31, 2014. Pub. L. 114-113, Div. Q, Sec. 302(c)(2)(B), provided the following transition rule:
“(B) TRANSITION RULE.—In the case of a refund of qualified higher education
expenses received after December 31, 2014, and before the date of the enactment of
this Act, section 529(c)(3)(D) of the Internal Revenue Code of 1986 (as added by this subsection) shall be applied by substituting “not
later than 60 days after the date of the enactment of this subparagraph” for
“not later than 60 days after the date of such refund”.”
Amendment by Pub. L. 114-113, Div. Q, Sec. 302(a), effective for taxable years beginning after December 31, 2014.
EFFECTIVE DATE OF 2014 AMENDMENTS
Amendments by Pub. L. 113-295, Div. B, Sec. 105(a), effective for taxable years beginning after December 31, 2014.
EFFECTIVE DATE OF 2009 AMENDMENTS
Amendments by Sec. 1005(a) of Pub. L. 111-5, Div. B, effective for expenses paid or incurred after December 31, 2008.
EFFECTIVE DATE OF 2006 AMENDMENTS
Amendment by Sec. 1304(b) of Pub. L. 109-280 applicable on the date of the enactment of this Act [Enacted: Aug. 17, 2006].
EFFECTIVE DATE OF 2005 AMENDMENTS
Amendment by Sec. 412(ee)(3) of Pub. L. 109-135 applicable on the date of the enactment of this Act [Enacted: Dec. 21, 2005].
EFFECTIVE DATE OF 2004 AMENDMENTS
Amendment by Sec. 207(21) of Pub. L. 108-311 applicable to taxable years beginning after December 31, 2004.
Amendment by Sec. 406(a) of Pub. L. 108-311 applicable as if included in the provision of the Taxpayer Relief Act of 1997 [Sec.
211] to which it relates [effective: transfers after Aug. 5, 1997].
EFFECTIVE DATE OF 2002 AMENDMENTS
Amendment by Sec. 417(11) of Pub. L. 107-147 applicable on the date of the enactment of this Act [enacted: Mar. 9, 2002].
EFFECTIVE DATE OF 2001 AMENDMENTS
Amendment by Sec. 1 of Pub. L. 107-22 applicable on the date of enactment of this Act [Enacted: July 26, 2001].
Amendments by Sec. 402 of Pub. L. 107-16 applicable to taxable years beginning after December 31, 2001.
Section 901 (Sunset of Provisions of Act) of Pub. L. 107-16, as amended by Pub. L. 107-358 and Pub. L. 111-312, Sec. 101(a), and struck by Pub. L. 112-240, Sec. 101(a)(1) (effective for taxable, plan, or limitation years beginning after Dec. 31, 2012,
and estates of decedents dying, gifts made, or generation skipping transfers after
Dec. 31, 2012), provided that:
“(a) IN GENERAL.--All provisions of, and amendments made by, this Act shall
not apply--
“(1) to taxable, plan, or limitation years beginning after December 31, 2012,
or
“(2) in the case of title V, to estates of decedents dying, gifts made, or generation
skipping transfers, after December 31, 2012.
“(b) APPLICATION OF CERTAIN LAWS.--The Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 shall be applied
and administered to years, estates, gifts, and transfers described in subsection (a)
as if the provisions and amendments described in subsection (a) had never been enacted.
“(c) EXCEPTION.-Subsection (a) shall not apply to section 803 (relating to no
federal income tax on restitution received by victims of the Nazi regime or their
heirs or estates).”
QUALIFIED TUITION PROGRAMS
Section 1304(a) of Pub. L. 109-280 provided that:
“(a) Permanent Extension of Modifications- Section 901 of the Economic Growth
and Tax Relief Reconciliation Act of 2001 (relating to sunset provisions) shall
not apply to section 402 of such Act (relating to modifications to qualified tuition
programs).”
EFFECTIVE DATE OF 1998 AMENDMENTS
Amendments by Sec. 6004(c) of Pub. L. 105-206 applicable as if included in the provisions of the Taxpayer Relief Act of 1997 to
which they relate [Effective Date of Pub. L. 105-34, Sec. 211(b)(2): Distributions after December 31, 1997, with respect to expenses paid after such
date (in taxable years ending after such date), for education furnished in academic
periods beginning after such date].
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendments by Sec. 211 of Pub. L. 105-34 effective on January 1, 1998, except:
(2) Amendments by Sec. 211(a)
of Pub. L. 105-34 effective as if included in the amendments made by section 1806 of the Small Business
Job Protection Act of 1996.
(3) Amendments by Sec. 211(b)(2)
of Pub. L. 105-34 applicable to distributions after December 31, 1997, with respect to expenses paid
after such date (in taxable years ending after such date), for education furnished
in academic periods beginning after such date.
(4) Coordination with education savings bonds.--The amendment made by subsection (c)
shall apply to taxable years beginning after December 31, 1997.
(5) Estate and gift tax changes.--
(A) Gift tax changes.--Paragraphs
(2) and (5) of section 529(c) of the Internal Revenue Code of 1986, as amended by this section, shall apply to transfers (including designations
of new beneficiaries)
made after the date of the enactment of this Act.
(B) Estate tax changes.--Paragraph
(4) of such section 529(c) shall apply to estates of decedents dying after June 8,
1997.
(6) Transition rule for pre-August 20, 1996 contracts.--In the case of any contract
issued prior to August 20, 1996, section 529(c)(3)(C)
of the Internal Revenue Code of 1986 shall be applied for taxable years ending after August 20, 1996, without regard
to the requirement that a distribution be transferred to a member of the family or
the requirement that a change in beneficiaries may be made only to a member of the
family.
EFFECTIVE DATE
Section 1806(c)(1) of Pub. L. 104-188, as amended by Pub. L. 105-34, Sec. 1601(h)(1)(C), provided that: “The amendments made by this section [enacting this section
and amending section 135 of this title] shall apply to taxable
years ending after the date of enactment of this Act [Aug. 20, 1996]."
Section 1806(c)(2) provided the following transition rule:
“(2) Transition rule.--If--
(A) a State or agency or instrumentality thereof maintains, on the date of the enactment
of this Act [Aug. 20, 1996], a program under which persons may purchase tuition credits
or certificates on behalf of, or make contributions for education expenses of, a designated
beneficiary, and
(B) such program meets the requirements of a qualified State tuition program before
the later of--
(i) the date which is 1 year after such date of enactment, or
(ii) the first day of the first calendar quarter after the close of the first regular
session of the State legislature that begins after such date of enactment,
then such program (as in effect on August 20, 1996) shall be treated as a qualified
State tuition program with respect to contributions (and earnings allocable thereto)
pursuant to contracts entered into under such program before the first date on which
such program meets such requirements (determined without regard to this paragraph)
and the provisions of such program
(as so in effect) shall apply in lieu of section 529(b) of the Internal Revenue Code of 1986 with respect to such contributions and earnings.
For purposes of subparagraph
(B)(ii), if a State has a 2-year legislative session, each year of such session shall
be deemed to be a separate regular session of the State legislature.”
