House File 188 - Introduced HOUSE FILE BY LUKAN Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act allowing the use of moneys in the Iowa educational savings 2 plan trust to be used for payment of a beneficiary's student 3 loans, excluding such payments from individual income tax, and 4 including effective and retroactive applicability date 5 provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 1813HH 83 8 mg/rj/8 PAG LIN 1 1 Section 1. Section 12D.4, Code 2009, is amended by adding 1 2 the following new subsection: 1 3 NEW SUBSECTION. 3. Moneys accrued by participants in the 1 4 program fund of the trust may be used for repayments of a 1 5 beneficiary's loans made for qualified education expenses. 1 6 The payments can be made to the entity that owns the loan, the 1 7 participant, or the beneficiary. 1 8 Sec. 2. Section 12D.9, subsection 2, Code 2009, is amended 1 9 to read as follows: 1 10 2. State income tax treatment of the Iowa educational 1 11 savings plan trust shall be as provided in section 422.7, 1 12 subsections 32,and33, and 34. 1 13 Sec. 3. Section 422.7, Code 2009, is amended by adding the 1 14 following new subsection: 1 15 NEW SUBSECTION. 34. Subtract, to the extent included, the 1 16 amount of withdrawals from the Iowa educational savings plan 1 17 trust which are used for repayments of a beneficiary's loans 1 18 made for qualified education expenses. 1 19 Sec. 4. EFFECTIVE AND RETROACTIVE APPLICABILITY DATES. 1 20 This Act, being deemed of immediate importance, takes effect 1 21 upon enactment and applies retroactively to January 1, 2009, 1 22 for tax years beginning on or after that date. 1 23 EXPLANATION 1 24 This bill allows participants in the Iowa educational 1 25 savings plan trust to withdraw funds from a beneficiary's 1 26 account to repay the beneficiary's loans made for qualified 1 27 education expenses. Because these withdrawals are not 1 28 currently considered qualified education expenses for income 1 29 tax purposes, these withdrawals would be included in gross 1 30 income. The bill provides that to the extent of such 1 31 inclusion, these withdrawals would not be included in net 1 32 income for state tax purposes. 1 33 The bill takes effect upon enactment and applies 1 34 retroactively to tax years beginning on or after January 1, 1 35 2009. 2 1 LSB 1813HH 83 2 2 mg/rj/8