Internal Revenue Code:Sec. 529. Qualified tuition programs

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Contents


Location in Internal Revenue Code


     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle A - Income Taxes
       CHAPTER 1 - NORMAL TAXES AND SURTAXES
        Subchapter F - Exempt Organizations
         PART VIII - HIGHER EDUCATION SAVINGS ENTITIES
       

Statute

    Sec. 529. Qualified tuition programs
 
    (a) General rule
      A qualified tuition program shall be exempt from taxation under
    this subtitle.  Notwithstanding the preceding sentence, such
    program shall be subject to the taxes imposed by section 511
    (relating to imposition of tax on unrelated business income of
    charitable organizations).
    (b) Qualified tuition program
      For purposes of this section -
      (1) In general
        The term ''qualified tuition program'' means a program
      established and maintained by a State or agency or
      instrumentality thereof or by 1 or more eligible educational
      institutions -
          (A) under which a person -
            (i) may purchase tuition credits or certificates on behalf
          of a designated beneficiary which entitle the beneficiary to
          the waiver or payment of qualified higher education expenses
          of the beneficiary, or
            (ii) in the case of a program established and maintained by
          a State or agency or instrumentality thereof, may make
          contributions to an account which is established for the
          purpose of meeting the qualified higher education expenses of
          the designated beneficiary of the account, and
          (B) which meets the other requirements of this subsection.
      Except to the extent provided in regulations, a program
      established and maintained by 1 or more eligible educational
      institutions shall not be treated as a qualified tuition program
      unless such program provides that amounts are held in a qualified
      trust and such program has received a ruling or determination
      that such program meets the applicable requirements for a
      qualified tuition program.  For purposes of the preceding
      sentence, the term ''qualified trust'' means a trust which is
      created or organized in the United States for the exclusive
      benefit of designated beneficiaries and with respect to which the
      requirements of paragraphs (2) and (5) of section 408(a) are met.
      (2) Cash contributions
        A program shall not be treated as a qualified tuition program
      unless it provides that purchases or contributions may only be
      made in cash.
      (3) Separate accounting
        A program shall not be treated as a qualified tuition program
      unless it provides separate accounting for each designated
      beneficiary.
      (4) No investment direction
        A program shall not be treated as a qualified tuition program
      unless it provides that any contributor to, or designated
      beneficiary under, such program may not directly or indirectly
      direct the investment of any contributions to the program (or any
      earnings thereon).
      (5) No pledging of interest as security
        A program shall not be treated as a qualified tuition program
      if it allows any interest in the program or any portion thereof
      to be used as security for a loan.
      (6) Prohibition on excess contributions
        A program shall not be treated as a qualified tuition program
      unless it provides adequate safeguards to prevent contributions
      on behalf of a designated beneficiary in excess of those
      necessary to provide for the qualified higher education expenses
      of the beneficiary.
    (c) Tax treatment of designated beneficiaries and contributors
      (1) In general
        Except as otherwise provided in this subsection, no amount
      shall be includible in gross income of -
          (A) a designated beneficiary under a qualified tuition
        program, or
          (B) a contributor to such program on behalf of a designated
        beneficiary,
      with respect to any distribution or earnings under such program.
      (2) Gift tax treatment of contributions
        For purposes of chapters 12 and 13 -
        (A) In general
          Any contribution to a qualified tuition program on behalf of
        any designated beneficiary -
            (i) shall be treated as a completed gift to such
          beneficiary which is not a future interest in property, and
            (ii) shall not be treated as a qualified transfer under
          section 2503(e).
        (B) Treatment of excess contributions
          If the aggregate amount of contributions described in
        subparagraph (A) during the calendar year by a donor exceeds
        the limitation for such year under section 2503(b), such
        aggregate amount shall, at the election of the donor, be taken
        into account for purposes of such section ratably over the
        5-year period beginning with such calendar year.
      (3) Distributions
        (A) In general
          Any distribution under a qualified tuition program shall be
        includible in the gross income of the distributee in the manner
        as provided under section 72 to the extent not excluded from
        gross income under any other provision of this chapter.
        (B) Distributions for qualified higher education expenses
          For purposes of this paragraph -
          (i) In-kind distributions
            No amount shall be includible in gross income under
          subparagraph (A) by reason of a distribution which consists
          of providing a benefit to the distributee which, if paid for
          by the distributee, would constitute payment of a qualified
          higher education expense.
          (ii) Cash distributions
            In the case of distributions not described in clause (i),
          if -
              (I) such distributions do not exceed the qualified higher
            education expenses (reduced by expenses described in clause
            (i)), no amount shall be includible in gross income, and
              (II) in any other case, the amount otherwise includible
            in gross income shall be reduced by an amount which bears
            the same ratio to such amount as such expenses bear to such
            distributions.
          (iii) Exception for institutional programs
            In the case of any taxable year beginning before January 1,
          2004, clauses (i) and (ii) shall not apply with respect to
          any distribution during such taxable year under a qualified
          tuition program established and maintained by 1 or more
          eligible educational institutions.
          (iv) Treatment as distributions
            Any benefit furnished to a designated beneficiary under a
          qualified tuition program shall be treated as a distribution
          to the beneficiary for purposes of this paragraph.
          (v) Coordination with Hope and Lifetime Learning credits
            The total amount of qualified higher education expenses
          with respect to an individual for the taxable year shall be
          reduced -
              (I) as provided in section 25A(g)(2), and
              (II) by the amount of such expenses which were taken into
            account in determining the credit allowed to the taxpayer
            or any other person under section 25A.
          (vi) Coordination with Coverdell education savings accounts
            If, with respect to an individual for any taxable year -
              (I) the aggregate distributions to which clauses (i) and
            (ii) and section 530(d)(2)(A) apply, exceed
              (II) the total amount of qualified higher education
            expenses otherwise taken into account under clauses (i) and
            (ii) (after the application of clause (v)) for such year,
         the taxpayer shall allocate such expenses among such
          distributions for purposes of determining the amount of the
          exclusion under clauses (i) and (ii) and section
          530(d)(2)(A).
        (C) Change in beneficiaries or programs
          (i) Rollovers
            Subparagraph (A) shall not apply to that portion of any
          distribution which, within 60 days of such distribution, is
          transferred -
              (I) to another qualified tuition program for the benefit
            of the designated beneficiary, or
              (II) to the credit of another designated beneficiary
            under a qualified tuition program who is a member of the
            family of the designated beneficiary with respect to which
            the distribution was made.
          (ii) Change in designated beneficiaries
            Any change in the designated beneficiary of an interest in
          a qualified tuition program shall not be treated as a
          distribution for purposes of subparagraph (A) if the new
          beneficiary is a member of the family of the old beneficiary.
          (iii) Limitation on certain rollovers
            Clause (i)(I) shall not apply to any transfer if such
          transfer occurs within 12 months from the date of a previous
          transfer to any qualified tuition program for the benefit of
          the designated beneficiary.
        (D) Operating rules
          For purposes of applying section 72 -
            (i) to the extent provided by the Secretary, all qualified
          tuition programs of which an individual is a designated
          beneficiary shall be treated as one program,
            (ii) except to the extent provided by the Secretary, all
          distributions during a taxable year shall be treated as one
          distribution, and
            (iii) except to the extent provided by the Secretary, the
          value of the contract, income on the contract, and investment
          in the contract shall be computed as of the close of the
          calendar year in which the taxable year begins.
      (4) Estate tax treatment
        (A) In general
          No amount shall be includible in the gross estate of any
        individual for purposes of chapter 11 by reason of an interest
        in a qualified tuition program.
        (B) Amounts includible in estate of designated beneficiary in
            certain cases
          Subparagraph (A) shall not apply to amounts distributed on
        account of the death of a beneficiary.
        (C) Amounts includible in estate of donor making excess
            contributions
          In the case of a donor who makes the election described in
        paragraph (2)(B) and who dies before the close of the 5-year
        period referred to in such paragraph, notwithstanding
        subparagraph (A), the gross estate of the donor shall include
        the portion of such contributions properly allocable to periods
        after the date of death of the donor.
      (5) Other gift tax rules
        For purposes of chapters 12 and 13 -
        (A) Treatment of distributions
          Except as provided in subparagraph (B), in no event shall a
        distribution from a qualified tuition program be treated as a
        taxable gift.
        (B)  Treatment of designation of new beneficiary.--
            The taxes imposed by chapters 12 and 13 shall apply 
            to a transfer by reason of a change in the designated 
            beneficiary under the program (or a rollover to the 
            account of a new beneficiary) unless the new 
            beneficiary is--
                  (i) assigned to the same generation as (or a 
                      higher generation than) the old beneficiary 
                      (determined in accordance with section 2651), and
                  (ii) a member of the family of the old 
                      beneficiary.
      (6) Additional tax
        The tax imposed by section 530(d)(4) shall apply to any payment
      or distribution from a qualified tuition program in the same
      manner as such tax applies to a payment or distribution from an
      Coverdell education individual retirement account.  This paragraph shall
      not apply to any payment or distribution in any taxable year
      beginning before January 1, 2004, which is includible in gross
      income but used for qualified higher education expenses of the
      designated beneficiary.
    (d) Reports
      Each officer or employee having control of the qualified tuition
    program or their designee shall make such reports regarding such
    program to the Secretary and to designated beneficiaries with
    respect to contributions, distributions, and such other matters as
    the Secretary may require.  The reports required by this subsection
    shall be filed at such time and in such manner and furnished to
    such individuals at such time and in such manner as may be required
    by the Secretary.
    (e) Other definitions and special rules
      For purposes of this section -
      (1) Designated beneficiary
        The term ''designated beneficiary'' means -
          (A) the individual designated at the commencement of
        participation in the qualified tuition program as the
        beneficiary of amounts paid (or to be paid) to the program,
          (B) in the case of a change in beneficiaries described in
        subsection (c)(3)(C), the individual who is the new
        beneficiary, and
          (C) in the case of an interest in a qualified tuition program
        purchased by a State or local government (or agency or
        instrumentality thereof) or an organization described in
        section 501(c)(3) and exempt from taxation under section 501(a)
        as part of a scholarship program operated by such government or
        organization, the individual receiving such interest as a
        scholarship.
      (2) Member of family
        The term ''member of the family'' means, with respect to any
      designated beneficiary -
          (A) the spouse of such beneficiary;
          (B) an individual who bears a relationship to such
          beneficiary which is described in subparagraphs (A) 
          through (G) of section 152(d)(2);
          (C) the spouse of any individual described in subparagraph
        (B); and
          (D) any first cousin of such beneficiary.
      (3) Qualified higher education expenses
        (A) In general
          The term ''qualified higher education expenses'' means -
            (i) tuition, fees, books, supplies, and equipment required
          for the enrollment or attendance of a designated beneficiary
          at an eligible educational institution; and
            (ii) expenses for special needs services in the case of a
          special needs beneficiary which are incurred in connection
          with such enrollment or attendance.
        (B) Room and board included for students who are at least
            half-time
          (i) In general
            In the case of an individual who is an eligible student (as
          defined in section 25A(b)(3)) for any academic period, such
          term shall also include reasonable costs for such period (as
          determined under the qualified tuition program) incurred by
          the designated beneficiary for room and board while attending
          such institution.  For purposes of subsection (b)(6), a
          designated beneficiary shall be treated as meeting the
          requirements of this clause.
          (ii) Limitation
            The amount treated as qualified higher education expenses
          by reason of clause (i) shall not exceed -
              (I) the allowance (applicable to the student) for room
            and board included in the cost of attendance (as defined in
            section 472 of the Higher Education Act of 1965 (20 U.S.C.
            1087ll), as in effect on the date of the enactment of the
            Economic Growth and Tax Relief Reconciliation Act of 2001)
            as determined by the eligible educational institution for
            such period, or
              (II) if greater, the actual invoice amount the student
            residing in housing owned or operated by the eligible
            educational institution is charged by such institution for
            room and board costs for such period.
      (4) Application of section 514
        An interest in a qualified tuition program shall not be treated
      as debt for purposes of section 514.
      (5) Eligible educational institution
        The term ''eligible educational institution'' means an
      institution -
          (A) which is described in section 481 of the Higher Education
        Act of 1965 (20 U.S.C. 1088), as in effect on the date of the
        enactment of this paragraph, and
          (B) which is eligible to participate in a program under title
        IV of such Act.
    (f) Regulations.--Notwithstanding any other provision of this 
      section, the Secretary shall prescribe such regulations as may be 
    necessary or appropriate to carry out the purposes of this section and 
    to prevent abuse of such purposes, including regulations under chapters 
    11, 12, and 13 of this title.


 

Sources

    (Added Pub. L. 104-188, title I, Sec. 1806(a), Aug. 20, 1996, 110
    Stat. 1895; amended Pub. L. 105-34, title II, Sec. 211(a), (b),
    (d), (e)(2)(A), title XVI, Sec. 1601(h)(1)(A), (B), Aug. 5, 1997,
    111 Stat. 810, 812, 1092; Pub. L. 105-206, title VI, Sec.
    6004(c)(2), (3), July 22, 1998, 112 Stat. 793; Pub. L. 106-554,
    Sec. 1(a)(7) (title III, Sec. 319(5)), Dec. 21, 2000, 114 Stat.
    2763, 2763A-646; Pub. L. 107-16, title IV, Sec. 402(a)(1)-(3),
    (4)(A), (C), (D), (b)(1), (c)-(g), June 7, 2001, 115 Stat. 60-63;
    Pub. L. 107-22, Sec. 1(b)(3)(C), July 26, 2001, 115 Stat. 197.)
 

Amendment of Section

                            AMENDMENT OF SECTION
        For termination of amendment by section 901 of Pub. L. 107-16,
      see Effective and Termination Dates of 2001 Amendment note below.
 

References in Text

                             REFERENCES IN TEXT
      The date of the enactment of the Economic Growth and Tax Relief
    Reconciliation Act of 2001, referred to in subsec.
    (e)(3)(B)(ii)(I), is the date of enactment of Pub. L. 107-16, which
    was approved June 7, 2001.
      The date of the enactment of this paragraph, referred to in
    subsec. (e)(5)(A), probably means the date of enactment of Pub. L.
    105-34, which enacted subsec. (e)(5) and which was approved Aug. 5,
    1997.
      The Higher Education Act of 1965, referred to in subsec. (e)(5),
    is Pub. L. 89-329, Nov. 8, 1965, 79 Stat. 1219, as amended.  Title
    IV of the Act is classified generally to subchapter IV (Sec. 1070
    et seq.) of chapter 28 of Title 20, Education, and part C (Sec.
    2751 et seq.) of subchapter I of chapter 34 of Title 42, The Public
    Health and Welfare. For complete classification of this Act to the
    Code, see Short Title note set out under section 1001 of Title 20
    and Tables.
 

Miscellaneous

                                 AMENDMENTS

2006 - Pension Protection Act of 2006 (P.L. 109-280)
SEC. 1304. <<NOTE: 26 USC 1 note.>> QUALIFIED TUITION PROGRAMS.
        (b) <<NOTE: 26 USC 529.>> Regulatory Authority To Prevent Abuse.--
Section 529 (relating to qualified tuition programs) is amended by 
adding at the end the following new subsection:
    ``(f) Regulations.--Notwithstanding any other provision of this 
section, the Secretary shall prescribe such regulations as may be 
necessary or appropriate to carry out the purposes of this section and 
to prevent abuse of such purposes, including regulations under chapters 
11, 12, and 13 of this title.''.

    2004 - Subsec.406(a),Pub.L.108-311, amended Sec.529(c)(5)(B).
    2004 - Pub.L. 108-311 Sec. 207(21).  Section 529(e)(2)(B) is amended
     by striking ``paragraphs (1) through (8) of section 152(a)'' and
     inserting ``subparagraphs (A) through (G) of section 152(d)(2)''.

      2001 - Pub. L. 107-16, Sec. 402(a)(4)(D), 901, temporarily struck
    out ''State'' before ''tuition'' in section catchline.  See
    Effective and Termination Dates of 2001 Amendment note below.
      Subsec. (a). Pub. L. 107-16, Sec. 402(a)(4)(A), 901, temporarily
    substituted ''qualified tuition'' for ''qualified State tuition''.
    See Effective and Termination Dates of 2001 Amendment note below.
      Subsec. (b). Pub. L. 107-16, Sec. 402(a)(4)(C), 901, temporarily
    substituted ''Qualified tuition'' for ''Qualified State tuition''
    in heading.  See Effective and Termination Dates of 2001 Amendment
    note below.
      Subsec. (b)(1). Pub. L. 107-16, Sec. 402(a)(1), (4)(A), 901, in
    introductory provisions, temporarily substituted ''qualified
    tuition'' for ''qualified State tuition'' and inserted ''or by 1 or
    more eligible educational institutions'' after ''thereof'', and
    temporarily added concluding provisions.  See Effective and
    Termination Dates of 2001 Amendment note below.
      Subsec. (b)(1)(A)(ii). Pub. L. 107-16, Sec. 402(a)(2), 901,
    temporarily inserted ''in the case of a program established and
    maintained by a State or agency or instrumentality thereof,''
    before ''may make''.  See Effective and Termination Dates of 2001
    Amendment note below.
      Subsec. (b)(2). Pub. L. 107-16, Sec. 402(a)(4)(A), 901,
    temporarily substituted ''qualified tuition'' for ''qualified State
    tuition''.  See Effective and Termination Dates of 2001 Amendment
    note below.
      Subsec. (b)(3) to (7). Pub. L. 107-16, Sec. 402(a)(3)(A), (4)(A),
    901, temporarily redesignated pars. (4) to (7) as (3) to (6),
    respectively, substituted ''qualified tuition'' for ''qualified
    State tuition'' wherever appearing, and struck out heading and text
    of former par. (3). Text read as follows: ''A program shall not be
    treated as a qualified State tuition program unless it imposes a
    more than de minimis penalty on any refund of earnings from the
    account which are not -
        ''(A) used for qualified higher education expenses of the
      designated beneficiary,
        ''(B) made on account of the death or disability of the
      designated beneficiary, or
        ''(C) made on account of a scholarship (or allowance or payment
      described in section 135(d)(1)(B) or (C)) received by the
      designated beneficiary to the extent the amount of the refund
      does not exceed the amount of the scholarship, allowance, or
      payment.''
    See Effective and Termination Dates of 2001 Amendment note below.
      Subsec. (c)(1)(A), (3)(A). Pub. L. 107-16, Sec. 402(a)(4)(A),
    901, temporarily substituted ''qualified tuition'' for ''qualified
    State tuition''.  See Effective and Termination Dates of 2001
    Amendment note below.
      Subsec. (c)(3)(B). Pub. L. 107-16, Sec. 402(b)(1), 901,
    temporarily amended heading and text of subpar. (B) generally.
    Prior to amendment, text read as follows: ''Any benefit furnished
    to a designated beneficiary under a qualified tuition program shall
    be treated as a distribution to the beneficiary.'' See Effective
    and Termination Dates of 2001 Amendment note below.
      Pub. L. 107-16, Sec. 402(a)(4)(A), 901, temporarily substituted
    ''qualified tuition'' for ''qualified State tuition''.  See
    Effective and Termination Dates of 2001 Amendment note below.
      Subsec. (c)(3)(B)(vi). Pub. L. 107-22 substituted ''Coverdell
    education savings'' for ''education individual retirement'' in
    heading.
      Subsec. (c)(3)(C). Pub. L. 107-16, Sec. 402(c)(3), 901,
    temporarily inserted ''or programs'' after ''beneficiaries'' in
    heading.  See Effective and Termination Dates of 2001 Amendment
    note below.
      Subsec. (c)(3)(C)(i). Pub. L. 107-16, Sec. 402(c)(1), 901,
    temporarily substituted ''transferred - '' for ''transferred'',
    added subcl. (I), and designated existing provisions ''to the
    credit'' as subcl. (II). See Effective and Termination Dates of
    2001 Amendment note below.
      Pub. L. 107-16, Sec. 402(a)(4)(A), 901, temporarily substituted
    ''qualified tuition'' for ''qualified State tuition''.  See
    Effective and Termination Dates of 2001 Amendment note below.
      Subsec. (c)(3)(C)(ii). Pub. L. 107-16, Sec. 402(a)(4)(A), 901,
    temporarily substituted ''qualified tuition'' for ''qualified State
    tuition''.  See Effective and Termination Dates of 2001 Amendment
    note below.
      Subsec. (c)(3)(C)(iii). Pub. L. 107-16, Sec. 402(c)(2), 901,
    temporarily added cl. (iii). See Effective and Termination Dates of
    2001 Amendment note below.
      Subsec. (c)(3)(D)(i). Pub. L. 107-16, Sec. 402(a)(4)(A), 901,
    temporarily substituted ''qualified tuition'' for ''qualified State
    tuition''.  See Effective and Termination Dates of 2001 Amendment
    note below.
      Subsec. (c)(3)(D)(ii). Pub. L. 107-16, Sec. 402(g)(1), 901,
    temporarily inserted ''except to the extent provided by the
    Secretary,'' before ''all distributions''.  See Effective and
    Termination Dates of 2001 Amendment note below.
      Subsec. (c)(3)(D)(iii). Pub. L. 107-16, Sec. 402(g)(2), 901,
    temporarily inserted ''except to the extent provided by the
    Secretary,'' before ''the value''.  See Effective and Termination
    Dates of 2001 Amendment note below.
      Subsec. (c)(6). Pub. L. 107-16, Sec. 402(a)(3)(B), 901,
    temporarily added par. (6). See Effective and Termination Dates of
    2001 Amendment note below.
      Subsecs. (d), (e)(1)(A), (C). Pub. L. 107-16, Sec. 402(a)(4)(A),
    901, temporarily substituted ''qualified tuition'' for ''qualified
    State tuition''.  See Effective and Termination Dates of 2001
    Amendment note below.
      Subsec. (e)(2)(D). Pub. L. 107-16, Sec. 402(d), 901, temporarily
    added subpar. (D). See Effective and Termination Dates of 2001
    Amendment note below.
      Subsec. (e)(3)(A). Pub. L. 107-16, Sec. 402(f), 901, temporarily
    reenacted heading without change and amended text of subpar. (A)
    generally.  Prior to amendment, text read as follows: ''The term
    'qualified higher education expenses' means tuition, fees, books,
    supplies, and equipment required for the enrollment or attendance
    of a designated beneficiary at an eligible educational
    institution.'' See Effective and Termination Dates of 2001
    Amendment note below.
      Subsec. (e)(3)(B)(i). Pub. L. 107-16, Sec. 402(a)(4)(A), 901,
    temporarily substituted ''qualified tuition'' for ''qualified State
    tuition''.  See Effective and Termination Dates of 2001 Amendment
    note below.
      Subsec. (e)(3)(B)(ii). Pub. L. 107-16, Sec. 402(e), 901,
    temporarily reenacted heading without change and amended text of
    cl. (ii) generally.  Prior to amendment, text read as follows:
    ''The amount treated as qualified higher education expenses by
    reason of the preceding sentence shall not exceed the minimum
    amount (applicable to the student) included for room and board for
    such period in the cost of attendance (as defined in section 472 of
    the Higher Education Act of 1965, 20 U.S.C. 1087ll, as in effect on
    the date of the enactment of this paragraph) for the eligible
    educational institution for such period.'' See Effective and
    Termination Dates of 2001 Amendment note below.
      Subsec. (e)(4). Pub. L. 107-16, Sec. 402(a)(4)(A), 901,
    temporarily substituted ''qualified tuition'' for ''qualified State
    tuition''.  See Effective and Termination Dates of 2001 Amendment
    note below.
      2000 - Subsec. (e)(3)(B). Pub. L. 106-554 struck out ''under
    guaranteed plans'' after ''students'' in heading.
      1998 - Subsec. (c)(3)(A). Pub. L. 105-206, Sec. 6004(c)(2),
    substituted ''section 72'' for ''section 72(b)''.
      Subsec. (e)(2). Pub. L. 105-206, Sec. 6004(c)(3), reenacted
    heading without change and amended text of par. (2) generally.
    Prior to amendment, text read as follows: ''The term 'member of the
    family' means -
        ''(A) an individual who bears a relationship to another
      individual which is a relationship described in paragraphs (1)
      through (8) of section 152(a), and
        ''(B) the spouse of any individual described in subparagraph
      (A).''
      1997 - Subsec. (b)(5). Pub. L. 105-34, Sec. 211(b)(4), inserted
    ''directly or indirectly'' after ''may not''.
      Subsec. (c)(2). Pub. L. 105-34, Sec. 211(b)(3)(A)(i), amended
    heading and text of par. (2) generally.  Prior to amendment, text
    read as follows: ''In no event shall a contribution to a qualified
    State tuition program on behalf of a designated beneficiary be
    treated as a taxable gift for purposes of chapter 12.''
      Subsec. (c)(3)(A). Pub. L. 105-34, Sec. 211(d), substituted
    ''section 72(b)'' for ''section 72''.
      Subsec. (c)(4). Pub. L. 105-34, Sec. 211(b)(3)(B), amended
    heading and text of par. (4) generally.  Prior to amendment, text
    read as follows: ''The value of any interest in any qualified State
    tuition program which is attributable to contributions made by an
    individual to such program on behalf of any designated beneficiary
    shall be includible in the gross estate of the contributor for
    purposes of chapter 11.''
      Subsec. (c)(5). Pub. L. 105-34, Sec. 211(b)(3)(A)(ii), amended
    heading and text of par. (5) generally.  Prior to amendment, text
    read as follows: ''For purposes of section 2503(e), the waiver (or
    payment to an educational institution) of qualified higher
    education expenses of a designated beneficiary under a qualified
    State tuition program shall be treated as a qualified transfer.''
      Subsec. (d). Pub. L. 105-34, Sec. 211(e)(2)(A), amended subsec.
    (d) generally.  Prior to amendment, subsec. (d) read as follows:
      ''(d) Reporting Requirements. -
        ''(1) In general. - If there is a distribution to any
      individual with respect to an interest in a qualified State
      tuition program during any calendar year, each officer or
      employee having control of the qualified State tuition program or
      their designee shall make such reports as the Secretary may
      require regarding such distribution to the Secretary and to the
      designated beneficiary or the individual to whom the distribution
      was made.  Any such report shall include such information as the
      Secretary may prescribe.
        ''(2) Timing of reports. - Any report required by this
      subsection -
          ''(A) shall be filed at such time and in such matter as the
        Secretary prescribes, and
          ''(B) shall be furnished to individuals not later than
        January 31 of the calendar year following the calendar year to
        which such report relates.''
      Subsec. (e)(1)(B). Pub. L. 105-34, Sec. 1601(h)(1)(A),
    substituted ''subsection (c)(3)(C)'' for ''subsection (c)(2)(C)''.
      Subsec. (e)(1)(C). Pub. L. 105-34, Sec. 1601(h)(1)(B), inserted
    ''(or agency or instrumentality thereof)'' after ''local
    government''.
      Subsec. (e)(2). Pub. L. 105-34, Sec. 211(b)(1), amended heading
    and text of par. (2) generally.  Prior to amendment, text read as
    follows: ''The term 'member of the family' has the same meaning
    given such term as section 2032A(e)(2).''
      Subsec. (e)(3). Pub. L. 105-34, Sec. 211(a), amended heading and
    text of par. (3) generally.  Prior to amendment, text read as
    follows: ''The term 'qualified higher education expenses' means
    tuition, fees, books, supplies, and equipment required for the
    enrollment or attendance of a designated beneficiary at an eligible
    educational institution (as defined in section 135(c)(3)).''
      Subsec. (e)(5). Pub. L. 105-34, Sec. 211(b)(2), added par. (5).
             EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENTS
      Amendment by Pub. L. 107-22 effective July 26, 2001, see section
    1(c) of Pub. L. 107-22, set out as a note under section 26 of this
    title.
      Amendment by Pub. L. 107-16 applicable to taxable years beginning
    after Dec. 31, 2001, see section 402(h) of Pub. L. 107-16, set out
    as a note under section 72 of this title.
      Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
    limitation years beginning after Dec. 31, 2010, and the Internal
    Revenue Code of 1986 to be applied and administered to such years
    as if such amendment had never been enacted, see section 901 of
    Pub. L. 107-16, set out as a note under section 1 of this title.
                      EFFECTIVE DATE OF 1998 AMENDMENT
      Amendment by Pub. L. 105-206 effective, except as otherwise
    provided, as if included in the provisions of the Taxpayer Relief
    Act of 1997, Pub. L. 105-34, to which such amendment relates, see
    section 6024 of Pub. L. 105-206, set out as a note under section 1
    of this title.
                      EFFECTIVE DATE OF 1997 AMENDMENT
      Section 211(f) of Pub. L. 105-34 provided that:
      ''(1) In general. - Except as otherwise provided in this
    subsection, the amendments made by this section (amending this
    section and sections 135 and 6693 of this title) shall take effect
    on January 1, 1998.
      ''(2) Expenses to include room and board. - The amendment made by
    subsection (a) shall take effect as if included in the amendments
    made by section 1806 of the Small Business Job Protection Act of
    1996 (Pub. L. 104-188).
      ''(3) Eligible educational institution. - The amendment made by
    subsection (b)(2) (amending this section) shall apply to
    distributions after December 31, 1997, with respect to expenses
    paid after such date (in taxable years ending after such date), for
    education furnished in academic periods beginning after such date.
      ''(4) Coordination with education savings bonds. - The amendment
    made by subsection (c) (amending section 135 of this title) shall
    apply to taxable years beginning after December 31, 1997.
      ''(5) Estate and gift tax changes. -
        ''(A) Gift tax changes. - Paragraphs (2) and (5) of section
      529(c) of the Internal Revenue Code of 1986, as amended by this
      section, shall apply to transfers (including designations of new
      beneficiaries) made after the date of the enactment of this Act
      (Aug. 5, 1997).
        ''(B) Estate tax changes. - Paragraph (4) of such section
      529(c) shall apply to estates of decedents dying after June 8,
      1997.
      ''(6) Transition rule for pre-august 20, 1996 contracts. - In the
    case of any contract issued prior to August 20, 1996, section
    529(c)(3)(C) of the Internal Revenue Code of 1986 shall be applied
    for taxable years ending after August 20, 1996, without regard to
    the requirement that a distribution be transferred to a member of
    the family or the requirement that a change in beneficiaries may be
    made only to a member of the family.''
      Amendment by section 1601(h)(1)(A), (B) of Pub. L. 105-34
    effective as if included in the provisions of the Small Business
    Job Protection Act of 1996, Pub. L. 104-188, to which it relates,
    see section 1601(j) of Pub. L. 105-34, set out as a note under
    section 23 of this title.
                               EFFECTIVE DATE
      Section 1806(c) of Pub. L. 104-188, as amended by Pub. L. 105-34,
    title XVI, Sec. 1601(h)(1)(C), Aug. 5, 1997, 111 Stat. 1092,
    provided that:
      ''(1) In general. - The amendments made by this section (enacting
    this section and amending section 135 of this title) shall apply to
    taxable years ending after the date of the enactment of this Act
    (Aug. 20, 1996).
      ''(2) Transition rule. - If -
        ''(A) a State or agency or instrumentality thereof maintains,
      on the date of the enactment of this Act, a program under which
      persons may purchase tuition credits or certificates on behalf
      of, or make contributions for education expenses of, a designated
      beneficiary, and
        ''(B) such program meets the requirements of a qualified State
      tuition program before the later of -
          ''(i) the date which is 1 year after such date of enactment,
        or
          ''(ii) the first day of the first calendar quarter after the
        close of the first regular session of the State legislature
        that begins after such date of enactment,
      then such program (as in effect on August 20, 1996) shall be
      treated as a qualified State tuition program with respect to
      contributions (and earnings allocable thereto) pursuant to
      contracts entered into under such program before the first date
      on which such program meets such requirements (determined without
      regard to this paragraph) and the provisions of such program (as
      so in effect) shall apply in lieu of section 529(b) of the
      Internal Revenue Code of 1986 with respect to such contributions
      and earnings.
    For purposes of subparagraph (B)(ii), if a State has a 2-year
    legislative session, each year of such session shall be deemed to
    be a separate regular session of the State legislature.''
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 72, 135, 221, 222, 530,
    6693 of this title.
 

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