[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1054 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1054

   To amend the Internal Revenue Code of 1986 to enhance various tax 
                       incentives for education.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 14, 1999

  Ms. Collins introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to enhance various tax 
                       incentives for education.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Savings for 
Scholars Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this title an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS.

    (a) Maximum Annual Contributions.--
            (1) In general.--Section 530(b)(1)(A)(iii) (defining 
        education individual retirement account) is amended by striking 
        ``$500'' and inserting ``$2,000''.
            (2) Conforming amendment.--Section 4973(e)(1)(A) is amended 
        by striking ``$500'' and inserting ``$2,000''.
    (b) Time When Contributions Deemed Made.--Section 530(b) (relating 
to definitions and special rules) is amended by adding at the end the 
following new paragraph:
            ``(4) Time when contributions deemed made.--A taxpayer 
        shall be deemed to have made a contribution to an education 
        individual retirement account on the last day of the preceding 
        taxable year if the contribution is made on account of such 
        taxable year and is made not later than the time prescribed by 
        law for filing the return for such taxable year (not including 
        extensions thereof).''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

SEC. 3. MODIFICATIONS TO QUALIFIED STATE TUITION PROGRAMS.

    (a) Beneficiary May Change Program.--Section 529(c)(3)(C) (relating 
to change in beneficiaries) is amended--
            (1) in clause (i), by striking ``transferred to the 
        credit'' and inserting ``transferred--
                                    ``(I) to another qualified State 
                                tuition program for the benefit of the 
                                designated beneficiary, or
                                    ``(II) to the credit'',
            (2) by adding at the end the following new clause:
                            ``(iii) Limitation on certain rollovers.--
                        Clause (i)(I) shall only apply to the first 3 
                        transfers with respect to a designated 
                        beneficiary.'', and
            (3) in the heading, by inserting ``or programs'' after 
        ``beneficiaries.
    (b) Member of Family Includes First Cousin.--Section 529(e)(2) 
(defining member of family) is amended by striking ``and'' at the end 
of subparagraph (B), by striking the period at the end of subparagraph 
(C) and by inserting ``; and'', and by adding at the end the following 
new subparagraph:
                    ``(D) any first cousin of such beneficiary.''
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made after December 31, 1998, in taxable years 
ending after such date.

SEC. 4. MODIFICATIONS TO HOPE AND LIFETIME LEARNING CREDITS.

    (a) Coordination With Education IRAs.--Subsection (e) of section 
25A (relating to Hope and Lifetime Learning credits) is amended to read 
as follows:
    ``(e) Coordination With Exclusions.--The amount of qualified 
tuition and related expenses otherwise taken into account under 
subsection (a) with respect to an individual for an academic period 
shall be reduced (before the application of subsections (b), (c), (d), 
and (g)) by any distribution from an education individual retirement 
account for the benefit of such individual which is allocable to such 
period, to the extent such distribution is excludable from gross income 
under section 530(d)(2).''
    (b) Effective Date.--The amendment made by this section shall apply 
to expenses paid after December 31, 1998, in taxable years ending after 
such date.
                                 <all>