Section 1 Short title
This Act may be cited as the “College Savings Recovery Act.”
College Savings Recovery Act.
A BILL
To amend the Internal Revenue Code of 1986 to allow for special rollovers to Roth IRAs from long-term qualified tuition programs.
Sec. 2 Special rollover to Roth IRA from long-term qualified tuition program
In general— Paragraph (3) of section 529(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
“(E) Special rollover to Roth IRA from long-term qualified tuition program—For purposes of this section—
“(i) In general—In the case of a distribution from a qualified tuition program which has been maintained by an account owner in one or more qualified tuition programs for the 10-year period ending on the date of such distribution—
“(I) subparagraph (A) shall not apply to any portion of such distribution which is paid in a direct trustee-to-trustee transfer to a Roth IRA maintained for the benefit of such account owner or the designated beneficiary under such qualified tuition program, and
“(II) such portion shall be treated as a rollover contribution for purposes of section 408A(e).
“(ii) Limitation—Clause (i) shall only apply to so much of any distribution as does not exceed the lesser of—
“(I) the amount applicable to the account owner or the designated beneficiary, as the case may be, under section 408A(c)(2) for the taxable year (reduced by the amount of aggregate contributions made during the taxable year before the date of such distribution to all individual retirement plans maintained for the benefit of the account owner or designated beneficiary, as the case may be), or
“(II) the aggregate amount contributed to the program (and earnings attributable thereto) before the 5-year period ending on the date of the distribution.
“(iii) Account owner—For purposes of this subparagraph, the term account owner means the individual who established the qualified tuition program account under applicable State law.”
Qualified rollover contribution— Paragraph (1) of section 408A(e) of such Code is amended—
by striking the period at the end of subparagraph (B) and inserting “, and”,
by inserting after subparagraph (B) the following new subparagraph:
“(C) from a qualified tuition program to the extent provided in section 529(c)(3)(E).”
by adding at the end the following new sentence: “Under regulations established by the Secretary, the earnings and contributions of any qualified tuition program from which a qualified rollover contribution is made under subparagraph (C) shall be treated in the same manner as the earnings and contributions of a Roth IRA from which a qualified rollover contribution is made under subparagraph (A).”.
Reporting— Section 529(d) of such Code is amended—
by striking “Each officer” and inserting the following:
“(1) In general—Each officer”
by striking “by this subsection” and inserting “by this paragraph”, and
by adding at the end the following new paragraph:
“(2) Rollover distributions—In the case of any distribution described in subsection (c)(3)(A), the officer or employee having control of the qualified tuition program (or their designee) shall provide a report to the trustee of the Roth IRA to which the distribution is made. Such report shall be filed at such time and in such manner as the Secretary may require and shall include information with respect to the contributions, distributions, and earnings of the qualified tuition program as of the date of the distribution described in subsection (c)(3)(A), together with such other matters as the Secretary may require.”
Effective date— The amendments made by this section shall apply with respect to distributions after December 31, 2022.