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H.R. 6767 - To amend the Internal Revenue Code of 1986 to allow qualified education loan repayments from section 529 plans.

Sponsor: Erik Paulsen (R)
Introduced: 2018-09-10
Bill Status: Referred to the House Committee on Ways and Means.
 

This bill amends the Internal Revenue Code to allow qualified tuition programs (known as 529 plans) to be used to repay qualified education loans. The bill allows up to $10,000 in distributions from a 529 plan to be used to pay the principal or interest on a qualified education loan of the designated beneficiary or a sibling of the beneficiary.

Full Text


115th CONGRESS
2d Session
H. R. 6767


    To amend the Internal Revenue Code of 1986 to allow qualified education loan repayments from section 529 plans.


IN THE HOUSE OF REPRESENTATIVES

September 10, 2018

    Mr. Paulsen 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 allow qualified education loan repayments from section 529 plans.

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

SECTION 1. Qualified education loan repayments allowed from section 529 plans.

(a) In general.—Section 529(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

“(8) TREATMENT OF QUALIFIED EDUCATION LOAN REPAYMENTS.—

“(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.

“(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).

“(C) SPECIAL RULES FOR SIBLINGS OF THE DESIGNATED BENEFICIARY.—

“(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.

“(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).”.

(b) Coordination with deduction for student loan interest.—Section 221(e)(1) of such Code is amended by adding at the end the following: “The deduction otherwise allowable under subsection (a) (prior to the application of subsection (b)) to the taxpayer for any taxable year shall be reduced (but not below zero) by so much of the distributions treated as a qualified higher education expense under section 529(c)(8) with respect to loans of the taxpayer as would be includible in gross income under section 529(c)(3)(A) for such taxable year but for such treatment.”.

(c) Effective date.—The amendments made by this section shall apply to distributions made after the date of the enactment of this Act.


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