Internal Revenue Code:Sec. 529. Qualified tuition programs
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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.