Text: H.R.5554 — 113th Congress (2013-2014)All Information (Except Text)

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Introduced in House (09/18/2014)


113th CONGRESS
2d Session
H. R. 5554


To amend the Internal Revenue Code of 1986 to permit distributions from 529 accounts for medical expenses of account owners who are veterans with disability ratings of greater than 50 percent.


IN THE HOUSE OF REPRESENTATIVES

September 18, 2014

Mr. Bishop of New York (for himself and Mr. Rangel) 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 permit distributions from 529 accounts for medical expenses of account owners who are veterans with disability ratings of greater than 50 percent.

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 “Helping Wounded Warriors Cover Medical Expenses Act”.

SEC. 2. Distributions from 529 accounts for medical expenses of account owners who are veterans with disability ratings of greater than 50 percent.

(a) Exemption from 529 penalty.—Section 529(c)(6) of the Internal Revenue Code of 1986 is amended to read as follows:

“(6) ADDITIONAL TAX.—

“(A) IN GENERAL.—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 a Coverdell education savings 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.

“(B) EXCEPTION.—Subparagraph (A) shall not apply to any payment or distribution from a qualified tuition program to the owner of an account under such program if—

“(i) at the time of such payment or distribution, the owner of such account is a veteran whom the Secretary of Veterans Affairs determines has a service-connected disability rated at 50 percent or more, and

“(ii) in lieu of using such payment or distribution for qualified higher education expenses, such payment or distribution is used for medical care (as defined in section 213(d)) for such owner.

“(C) COORDINATION WITH MEDICAL EXPENSE DEDUCTION.—For purposes of determining the amount of the deduction under section 213, any payment or distribution to which subparagraph (B) applies shall not be treated as an expense paid for medical care.”.

(b) Exclusion from income.—Section 72(e)(6) of the Internal Revenue Code of 1986 is amended to read as follows:

“(6) EXTENSION OF PARAGRAPH (2)(B) TO QUALIFIED TUITION PROGRAMS AND COVERDELL EDUCATION SAVINGS ACCOUNTS.—

“(A) IN GENERAL.—Notwithstanding any other provision of this subsection, paragraph (2)(B) shall apply to amounts received under a qualified tuition program (as defined in section 529(b)) or under a Coverdell education savings account (as defined in section 530(b)). The rule of paragraph (8)(B) shall apply for purposes of this paragraph.

“(B) EXCEPTION.—In the case of an amount received under a qualified tuition program (as defined in section 529(b)) which is not subject to the penalty under subparagraph (A) of section 529(c)(6) by reason of subparagraph (B) thereof—

“(i) subparagraph (A) of this paragraph shall not apply, and

“(ii) the amount received which, but for this subparagraph, would be treated as income on the contract shall be treated as investment in the contract.”.

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