TITLE IV—AFFORDABLE EDUCATION PROVISIONS
Subtitle A—Education Savings Incentives
SEC. 401. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS.
(a) Maximum Annual Contributions.—
(1) In general.—Section 530(b)(1)(A)(iii) (defining education individual retirement account) is amended by striking ``$500'' and inserting ``$2,000''. (2) Conforming amendment.—Section 4973(e)(1)(A) is amended by striking ``$500'' and inserting ``$2,000''.
(b) Modification of AGI Limits To Remove Marriage Penalty.—Section 530(c)(1) (relating to reduction in permitted contributions based on adjusted gross income) is amended— (1) by striking ``$150,000'' in subparagraph (A)(ii) and inserting ``$190,000'', and (2) by striking ``$10,000'' in subparagraph (B) and inserting ``$30,000''.
(c) Tax-Free Expenditures for Elementary and Secondary School Expenses.—
(1) In general.—Section 530(b)(2) (defining qualified higher education expenses) is amended to read as follows: ``(2) Qualified education expenses.— ``(A) In general.—The term `qualified education expenses' means— ``(i) qualified higher education expenses (as defined in section 529(e)(3)), and ``(ii) qualified elementary and secondary education expenses (as defined in paragraph (4)). ``(B) Qualified state tuition programs.—Such term shall include any contribution to a qualified State tuition program (as defined in section 529(b)) on behalf of the designated beneficiary (as defined in section 529(e)(1)); but there shall be no increase in the investment in the contract for purposes of applying section 72 by reason of any portion of such contribution which is not includible in gross income by reason of subsection (d)(2).''. (2) Qualified elementary and secondary education expenses.— Section 530(b) (relating to definitions and special rules) is amended by adding at the end the following new paragraph: ``(4) Qualified elementary and secondary education expenses.— ``(A) In general.—The term `qualified elementary and secondary education expenses' means— ``(i) expenses for tuition, fees, academic tutoring, special needs services in the case of a special needs beneficiary, books, supplies, and other equipment which are incurred in connection with the enrollment or attendance of the designated beneficiary of the trust as an elementary or secondary school student at a public, private, or religious school, ``(ii) expenses for room and board, uniforms, transportation, and supplementary items and services (including extended day programs) which are required or provided by a public, private, or religious school in connection with such enrollment or attendance, and ``(iii) expenses for the purchase of any computer technology or equipment (as defined in section 170(e)(6)(F)(i)) or Internet access and related services, if such technology, equipment, or services are to be used by the beneficiary and the beneficiary's family during any of the years the beneficiary is in school. ``Clause (iii) shall not include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature. ``(B) School.—The term `school' means any school which provides elementary education or secondary education (kindergarten through grade 12), as determined under State law.''. (3) Conforming amendments.—Section 530 is amended— (A) by striking ``higher'' each place it appears in subsections (b)(1) and (d)(2), and (B) by striking ``higher'' in the heading for subsection (d)(2).
(d) Waiver of Age Limitations for Children With Special Needs.—Section 530(b)(1) (defining education individual retirement account) is amended by adding at the end the following flush sentence: ``The age limitations in subparagraphs (A)(ii) and (E), and paragraphs (5) and (6) of subsection (d), shall not apply to any designated beneficiary with special needs (as determined under regulations prescribed by the Secretary).''.