“To amend the Internal Revenue Code of 1986 to allow distributions from qualified tuition programs for first home purchases, and for other purposes.”
No CRS summary available for this bill.
This section establishes an exception to the 10% additional tax on non-qualified distributions from qualified tuition programs (i.e., 529 plans, tax-advantaged savings accounts for qualified education expenses) for qualified first-time homebuyer distributions. Such distributions, if used by the designated beneficiary within 120 days to pay qualified acquisition costs for a principal residence of the beneficiary, the beneficiary's spouse, or a child, grandchild, or ancestor of either who qualifies as a first-time homebuyer (i.e., no ownership interest in a principal residence during the prior two years), are treated as qualified. (Thus, 529 plan savings may be used penalty-free for certain first-time home purchases.) The section further (1) permits rollovers of such distributions to another 529 plan or ABLE account within 120 days (instead of 60 days) if the home purchase or construction is delayed or canceled; and (2) allows recontributions of equivalent amounts to a 529 plan or ABLE account during an applicable period of up to 180 days following qualified disasters declared after enactment under the Stafford Act, for distributions received up to 30 days after a disaster's incident period that were intended but unable to be used for principal residences in the disaster area. The provision applies to distributions made after the date of enactment.