[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3585 Introduced in House (IH)]







109th CONGRESS
  1st Session
                                H. R. 3585

To amend the Internal Revenue Code of 1986 to exclude from gross income 
 employer contributions to college tuition plans and education savings 
                               accounts.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 28, 2005

  Mr. Porter (for himself, Mr. McKeon, Mr. Garrett of New Jersey, Ms. 
 Ginny Brown-Waite of Florida, Mr. Ruppersberger, Mr. Hostettler, Mr. 
   Kline, Mr. Paul, Mr. Souder, Mr. Neugebauer, Mr. Platts, Ms. Ros-
  Lehtinen, and Mr. Rehberg) introduced the following bill; which was 
              referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to exclude from gross income 
 employer contributions to college tuition plans and education savings 
                               accounts.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Education Savings Act of 2005''.

SEC. 2. EXCLUSION FROM GROSS INCOME FOR CONTRIBUTIONS TO EDUCATION 
              SAVINGS ENTITIES.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by inserting after section 127 the 
following new section:

``SEC. 127A. CONTRIBUTIONS TO EDUCATION SAVINGS ENTITIES.

    ``(a) In General.--Gross income of an employee does not include 
amounts paid by the employer as contributions to an education savings 
entity held by the employee or spouse of the employee if the 
contributions are made pursuant to a program which is described in 
subsection (b).
    ``(b) Educational Assistance Program.--For purposes of this 
section, an educational assistance program is a separate written plan 
of an employer for the benefit of such employer's employees--
            ``(1) under which the employer makes contributions to 
        education savings entities of such employees or spouses of 
        employees, and
            ``(2) which meets requirements similar to the requirements 
        of paragraphs (2), (3), (4), (5), and (6) of section 127(b).
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Education savings entity.--The term `education 
        savings entity' means--
                    ``(A) a qualified tuition program (as defined in 
                section 529(b)), and
                    ``(B) a Coverdell education savings account (as 
                defined in section 530(b)).
            ``(2) Employee and employer.--The terms `employee' and 
        `employer' shall have the meaning given such terms by 
        paragraphs (2) and (3), respectively, of section 127(c).
            ``(3) Applicable rules.--Rules similar to the rules of 
        paragraphs (4), (5), (6), and (7) of section 127(c) shall 
        apply.
    ``(d) Cross Reference.--For reporting and recordkeeping 
requirements, see section 6039D.''.
    (b) Exclusion From Employment Taxes.--
            (1) Sections 3121(a)(18), 3306(b)(13), and 3401(a)(18) of 
        such Code are each amended by inserting ``127A,'' after 
        ``127,'' each place it appears.
            (2) Section 3231(e)(6) of such Code is amended by striking 
        ``section 127'' and inserting ``section 127 or 127A''.
    (c) Reporting and Recordkeeping Requirements.--Section 6039D(d)(1) 
of such Code is amended by inserting ``127A,'' after ``127,''.
    (d) Other Conforming Amendments.--
            (1) Section 51A(b)(5)(B) of such Code is amended by 
        striking ``or'' at the end of clause (iii), by redesignating 
        clause (iv) as clause (v), and by inserting after clause (iii) 
        the following new clause:
                            ``(iv) section 127A (relating to 
                        contributions to education savings entities), 
                        but only to the extent paid or incurred to a 
                        person not related to the employer, or''.
            (2) Sections 125(f), 414(n)(3)(C), and 414(t)(2) of such 
        Code are each amended by inserting ``127A,'' after ``127,'' 
        each place it appears.
            (3) Section 132(j)(8) of such Code is amended by striking 
        ``section 127'' and inserting ``section 127 or 127A''.
            (4) Section 1397(a)(2)(A) of such Code is amended by 
        inserting at the end the following new clause:
                            ``(iii) Any amount paid or incurred by an 
                        employer which is excludable from the gross 
                        income of an employee under section 127A, but 
                        only to the extent paid or incurred to a person 
                        not related to the employer.''.
            (5) Section 209(15) of the Social Security Act (42 U.S.C. 
        409(15)) is amended by striking ``or 129'' and inserting ``, 
        127A, or 129''.
    (e) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by inserting after 
the item relating to section 127 the following new item:

``Sec. 127A. Contributions to education savings entities.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to remuneration paid after December 31, 2005.
                                 <all>