[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2240 Introduced in House (IH)]
103d CONGRESS
1st Session
H. R. 2240
To amend the Internal Revenue Code of 1986 to promote savings for
qualified higher education expenses.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 24, 1993
Mr. Jacobs (for himself and Mr. McCrery) 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 promote savings for
qualified higher education expenses.
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 ``Higher Education Savings Plan Act of
1993''.
SEC. 2. PENALTY FREE WITHDRAWALS FROM ANNUITIES FOR HIGHER EDUCATION
EXPENSES.
(a) In General.--Paragraph (2) of section 72(q) of the Internal
Revenue Code of 1986 (relating to 10-percent penalty for premature
distributions from annuity contracts) is amended by striking ``or'' at
the end of subparagraph (I), by striking the period at the end of
subparagraph (J) and inserting ``, or'', and by inserting after
subparagraph (J) the following new subparagraph:
``(K) which is a qualified higher education expense
distribution (as defined in paragraph (4)).''
(b) Qualified Higher Education Expense Distribution.--Subsection
(q) of section 72 of such Code is amended by adding at the end thereof
the following new paragraph:
``(4) Qualified higher education expense distribution.--
``(A) In general.--For purposes of paragraph
(2)(K), the term `qualified higher education expense
distribution' means any distribution from a designated
higher education expense annuity to the taxpayer if
such distribution is used within 90 days of the date of
the distribution to pay qualified tuition and related
expenses (as defined in section 117(b)) required for
the enrollment or attendance of such taxpayer, the
taxpayer's spouse, or a child (as defined in section
151(c)(3)) or grandchild of such taxpayer at an
eligible educational institution (as defined in section
135(c)(3)); except that such expenses shall be reduced
by any amount excluded from gross income under section
135 by reason of such expenses.
``(B) Designated higher education expense
annuity.--
``(i) In general.--The term `designated
higher education expense annuity' means any
annuity purchased after December 31, 1992, and
designated for purposes of this paragraph by
the purchaser at the time of purchase as an
annuity to which this paragraph applies.
``(ii) Certain annuities received in an
exchange not eligible.--Such term shall not
include any annuity acquired in an exchange to
which section 1035 applies unless the annuity
given up by the taxpayer in the exchange was a
designated higher education expense annuity.''
(c) Gift Tax Treatment.--Subsection (e) of section 2503 of such
Code is amended by adding at the end thereof the following new
paragraph:
``(3) Treatment of premiums paid under designated higher
education expense annuities.--
``(A) In general.--Any premium paid for a
designated higher education expense annuity shall not
be treated as transfer of property by gift for purposes
of this chapter.
``(B) Recapture rules.--If any premium paid by any
person for a designated higher education expense
annuity is not treated as a taxable gift solely by
reason of subparagraph (A)--
``(i) Lifetime distributions not used for
educational purposes.--Any disqualified
lifetime distribution from the portion of any
annuity attributable to such premium shall be
treated as a transfer by gift by such person.
``(ii) Inclusion in gross estate.--The
gross estate of such person shall include the
value (as of the date of the decedent's death
or applicable valuation date set forth in
section 2032) of the portion of any annuity
attributable to such premium.
``(C) Disqualified lifetime distribution.--For
purposes of subparagraph (B), the term `disqualified
lifetime distribution' means any distribution which is
not a qualified higher education distribution and which
is made during the life of the person referred to in
subparagraph (B) to or for the benefit of another
person.
``(D) Other definitions.--For purposes of this
paragraph, the terms `designated higher education
expense annuity' and `qualified higher education
expense distribution' have the respective meanings
given such terms by section 72(q)(4).''
(d) Effective Date.--The amendments made by this section shall take
effect on January 1, 1994.
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