To amend the Internal Revenue Code of 1986 to provide for the establishment of, and the deduction of contributions to, education savings accounts.

Summary

Amends the Internal Revenue Code to allow an individual income tax deduction for up to $1,200 annually of contributions to a savings account established to pay the educational expenses (tuition, supplies, meals, and lodging) of any individual under age 21 at an institution of higher education or a vocational school. Disallows the deduction for contributions to an account maintained for any individual aged 21 or older. Requires any account balance to be distributed after the beneficiary attains age 27. Excludes from gross income any account distributions that are: (1) used to pay educational expenses of the eligible beneficiary; or (2) transferred within 60 days to an individual retirement account. Exempts an account from taxation (except for the tax on unrelated business income of a charitable organization) unless a contributor or the beneficiary engages in specified prohibited transactions in connection with it. Imposes a ten percent surtax on distributions not used for educational purposes. Requires the account trustee to report to the Secretary of the Treasury and to the account's beneficiary concerning the account. Imposes a penalty for failure to report. Allows taxpayers who do not otherwise itemize deductions to deduct for contributions to an education savings account. Imposes penalty taxes in connection with excess contributions or prohibited transactions associated with an account.

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Documents

2 official files

• Introduced in House (text)

  Introduced in House · EN

  ViewDownloadOpen at official source

• Introduced in House

  summary · EN · 13 April 1989

  Open at official source

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