[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 5227 Introduced in Senate (IS)]
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119th CONGRESS
2d Session
S. 5227
To amend the Internal Revenue Code of 1986 to allow certain
distributions from long-term qualified tuition programs for first home
purchases, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
August 4, 2026
Mr. Husted (for himself and Mr. Bennet) 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 allow certain
distributions from long-term qualified tuition programs for first home
purchases, and for other purposes.
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 ``First-Time Home Buyer Empowerment
Act''.
SEC. 2. SPECIAL RULE FOR CERTAIN DISTRIBUTIONS FROM LONG-TERM QUALIFIED
TUITION PROGRAMS FOR FIRST HOME PURCHASES.
(a) In General.--Section 529(c)(3) of the Internal Revenue Code of
1986 is amended by adding at the end the following new subparagraph:
``(F) Special rule for certain distributions from
long-term qualified tuition programs for first home
purchases.--
``(i) In general.--In the case of a
distribution from an account of a designated
beneficiary which has been maintained under 1
or more qualified tuition programs for the 15-
year period ending on the date of such
distribution, subparagraph (A) shall not apply
to so much of the portion of such distribution
which--
``(I) does not exceed the aggregate
amount contributed to the program (and
earnings attributable thereto) before
the 5-year period ending on the date of
the distribution, and
``(II) is used, within 60 days of
such distribution, for the purchase of
a principal residence of a first-time
homebuyer who is the designated
beneficiary with respect to such
account.
``(ii) Limitations.--
``(I) In general.--This
subparagraph shall apply only to a
distribution from an account of the
original designated beneficiary of the
account, or any successor designated
beneficiary who is of the same or a
lower generation than the original
designated beneficiary.
``(II) Aggregate limitation.--This
subparagraph shall not apply to any
distribution described in clause (i) to
the extent that the aggregate amount of
such distributions with respect to the
designated beneficiary for the taxable
year and all prior taxable years
exceeds an amount equal to $35,000,
reduced by the aggregate amount of
distributions to which subparagraph (E)
applies with respect to such designated
beneficiary for such taxable year and
all prior taxable years.
``(iii) Special rule where delay in
acquisition.--If any distribution from a
qualified tuition program of a designated
beneficiary fails to meet the requirements of
subparagraph (A) solely by reason of a delay or
cancellation of the purchase or construction of
the residence, the amount of the distribution
may be contributed to a qualified tuition
program or ABLE account of such beneficiary, as
provided in subclauses (I) and (III),
respectively, of subparagraph (C)(i),
determined by substituting `120 days' for `60
days' in such subparagraph, except that--
``(I) subparagraph (C)(iii) shall
not be applied to such contribution,
and
``(II) such amount shall not be
taken into account in determining
whether subparagraph (C)(iii) applies
to any other amount.
``(iv) Recapture of tax benefit.--
``(I) In general.--If subparagraph
(A) does not apply to a distribution by
reason of this subparagraph and a
qualifying event occurs before the
close of the 5-year period beginning on
the date of the purchase of the
principal residence with respect to
which such distribution was used, the
designated beneficiary's tax for the
taxable year in which such qualifying
event occurs shall be increased by an
amount, determined under regulations,
equal to the tax which (but for this
subparagraph) would have been imposed
with respect to such distribution, plus
interest for the deferral period. The
amount of any increase determined under
the preceding sentence shall be reduced
(but not below zero) by 20 percent for
each full year occurring during the
period beginning on the date of such
purchase and ending on the date of such
qualifying event.
``(II) Qualifying event.--For
purposes of this clause, the term
`qualifying event' means, with respect
to a distribution to which subparagraph
(A) does not apply by reason of this
subparagraph, the disposition of the
principal residence which the
designated beneficiary purchased using
such distribution, or the cessation of
use of such residence as the principal
residence of the designated beneficiary
(and, if married, such designated
beneficiary's spouse).
``(III) Deferral period.--For
purposes of this clause, the term
`deferral period' means, with respect
to a distribution to which subparagraph
(A) does not apply by reason of this
subparagraph, the period beginning with
the taxable year in which (without
regard to this subparagraph) the
distribution would have been includible
in gross income and ending with the
taxable year in which the qualifying
event described in subclause (I)
occurs.
``(IV) Exceptions.--Rules similar
to the rules of subparagraphs (A), (B),
(C), and (E) of section 36(f)(4) shall
apply for purposes of this
subparagraph.
``(v) Definitions.--For purposes of this
subparagraph, the terms `purchase', `principal
residence', and `first-time homebuyer' have the
meaning given such terms in section 36(c).''.
(b) Coordination With Aggregate Limitation on Special Rollovers to
Roth IRAs.--Section 529(c)(3)(E)(ii)(II) of the Internal Revenue Code
of 1986 is amended to read as follows:
``(II) Aggregate limitation.--This
subparagraph shall not apply to any
distribution described in clause (i) to
the extent that the aggregate amount of
such distributions with respect to the
designated beneficiary for the taxable
year and all prior taxable years
exceeds an amount equal to $35,000,
reduced by the aggregate amount of
distributions to which subparagraph (F)
applies with respect to such designated
beneficiary for such taxable year and
all prior taxable years.''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions made in taxable years beginning after the date
of the enactment of this Act.
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