[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 2471 Introduced in Senate (IS)]

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114th CONGRESS
  2d Session
                                S. 2471

   To amend the Internal Revenue Code of 1986 to improve and expand 
                 Coverdell education savings accounts.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 28, 2016

     Mr. Kirk (for himself, Mr. Hatch, Mr. Toomey, and Mr. Vitter) 
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 improve and expand 
                 Coverdell 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 ``401(Kids) Education Savings Account 
Modernization Act of 2016''.

SEC. 2. ELIMINATION OF INCOME-BASED REDUCTION IN PERMITTED 
              CONTRIBUTIONS BY NON-CUSTODIANS TO COVERDELL EDUCATION 
              SAVINGS ACCOUNTS.

    (a) In General.--Paragraph (1) of section 530(c) of the Internal 
Revenue Code of 1986 is amended by striking ``who is an individual'' 
and inserting ``who is an individual and is the custodial parent of the 
designated beneficiary''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions in taxable years beginning after December 31, 2016.

SEC. 3. INCREASE IN ANNUAL CONTRIBUTION LIMITATION FOR COVERDELL 
              EDUCATION SAVINGS ACCOUNTS.

    (a) In General.--Subparagraph (A) of section 530(b)(1) of the 
Internal Revenue Code of 1986 is amended--
            (1) by striking ``$2,000'' in clause (iii) and inserting 
        ``the dollar amount in effect under section 2503(b) (relating 
        to exclusion from gifts) for the taxable year'',
            (2) by striking ``or'' at the end of clause (ii),
            (3) by striking the period at the end of clause (iii) and 
        inserting ``, or'', and
            (4) by adding at the end the following new clause:
                            ``(iv) if such contribution would result in 
                        aggregate contributions for the taxable year 
                        exceeding $5,500 from any one donor.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to contributions made in taxable years beginning after December 
31, 2016.

SEC. 4. ALLOWANCE OF HOME SCHOOL EXPENSES AS QUALIFIED EDUCATION 
              EXPENSES FOR PURPOSES OF A COVERDELL EDUCATION SAVINGS 
              ACCOUNT.

    (a) In General.--Paragraph (3) of section 530(b) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(C) Private school.--For purposes of this 
                section, the term `private school' includes any home 
                school that meets the requirements of State law 
                applicable to such home schools, whether or not such 
                school is deemed a private school for purposes of State 
                law.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2016.

SEC. 5. QUALIFIED ROLLOVER CONTRIBUTIONS FROM COVERDELL EDUCATION 
              SAVINGS ACCOUNTS TO ROTH IRAS.

    (a) In General.--Paragraph (5) of section 530(d) of the Internal 
Revenue Code of 1986 is amended by inserting ``, or into a Roth IRA of 
the beneficiary (but only to the extent such amount does not exceed 
$10,000)'' after ``as of such date''.
    (b) Conforming Amendment; Technical Correction.--Paragraph (1) of 
section 408A(e) of the Internal Revenue Code of 1986 is amended to read 
as follows:
            ``(1) In general.--The term `qualified rollover 
        contribution' means a rollover contribution to a Roth IRA from 
        another such account, from an eligible retirement plan (as 
        defined in section 402(c)(8)(B)), or from a Coverdell education 
        savings account (as defined in section 530(b)(1)), but only 
        if--
                    ``(A) such rollover contribution meets the 
                requirements of section 408(d)(3),
                    ``(B) in the case of a rollover contribution from 
                an eligible retirement plan described in clause (iii), 
                (iv), (v), or (vi) of section 402(c)(8)(B), such 
                contribution meets the requirements of section 402(c), 
                403(b)(8), or 457(e)(16), whichever is applicable, and
                    ``(C) in the case of a rollover contribution from a 
                Coverdell education savings account, such contribution 
                meets the requirements of section 530(d)(5).
        For purposes of section 408(d)(3)(B), there shall be 
        disregarded any qualified rollover contribution from an 
        individual retirement plan (other than a Roth IRA) to a Roth 
        IRA.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to rollover contributions made in taxable years beginning after 
December 31, 2016.

SEC. 6. 401KIDS.GOV.

    The Secretary of Education shall establish an Internet website (to 
be known as ``401Kids.gov'') on which information is provided to the 
public free of charge concerning the available options for tax-favored 
education savings accounts under the Internal Revenue Code of 1986.
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