This bill adds a new rule to section 529(c)(3) of the tax code. It allows certain withdrawals from qualified tuition programs (often called 529 accounts) to be used for a first home purchase. A "qualified first-time homebuyer distribution" is a withdrawal that a beneficiary uses within 120 days to pay "qualified acquisition costs" for a principal residence for a first-time homebuyer. The beneficiary, the beneficiary's spouse, or the beneficiary's child, grandchild, or ancestor (or the spouse's) may be the homebuyer.
The bill says "qualified acquisition costs" have the meaning given in section 72(t)(8). It defines "first-time homebuyer" as someone who (and whose spouse, if married) had no present ownership interest in a main home during the 2 years before the acquisition. "Principal residence" uses the same meaning as section 121. "Date of acquisition" means the date a binding contract to buy the home is signed or when construction or reconstruction begins.
If a withdrawal fails to meet the 120-day rule only because of a delay or cancellation in the purchase or construction, the amount may be transferred to another 529 account or to an ABLE account under a modified 120-day/60-day rule, with certain exceptions described in the bill. The bill also allows certain recontributions after qualified distributions tied to disasters and sets out definitions for "qualified disaster," "qualified disaster area," "incident period," and an "applicable period" for those recontributions.
The amendment applies to distributions made after the date the bill is enacted.
No publicly available information on projected federal budget effects, revenue changes, or cost estimates is included in the bill text provided. The bill text does not include overall dollar limits or a fiscal analysis.
No publicly available information in the bill text about supporters' stated reasons, goals, or arguments.
No publicly available information in the bill text about opponents' stated concerns, reasons, or arguments.