HF 2340 (LSB 5485HV (1) 88)

HOUSE FILE 2340

BY  COMMITTEE ON EDUCATION

(SUCCESSOR TO HF 2024)

A BILL FOR

An Act relating to the Iowa educational savings plan trust by permitting the use of funds for certain beneficiaries to attend out-of-state elementary or secondary schools, and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.7, subsection 32, paragraph c, subparagraph (2), subparagraph division (a), Code 2020, is amended to read as follows:
   (a)  (i)  “Elementary or secondary school” Except as provided in subparagraph subdivision (ii), “elementary or secondary school” means an elementary or secondary school in this state which is accredited under section 256.11, and adheres to the provisions of the federal Civil Rights Act of 1964 and chapter 216.
   (ii)  “Elementary or secondary school” includes an elementary or secondary school located out of state that educates a beneficiary who meets the definition of “children requiring special education” in section 256B.2, if the elementary or secondary school is accredited under the laws of the state in which it is located and adheres to the federal Civil Rights Act of 1964 and applicable state law analogous to chapter 216.
    Sec. 2.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2020, for tax years beginning on or after that date.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the Iowa educational savings plan trust (529 plan) by permitting the use of funds for certain beneficiaries to attend out-of-state elementary or secondary schools.
   Currently, a taxpayer does not pay taxes on money withdrawn from a 529 plan to pay for qualified education expenses to an elementary or secondary school located in this state, among other tax incentives available to a participant in a 529 plan. The bill amends the definition of “elementary or secondary school” by permitting tax-free withdrawals to pay qualified educational expenses for an out-of-state elementary or secondary school that educates a beneficiary who meets the definition of “children requiring special education” in Code section 256B.2.
   The bill applies retroactively to tax years beginning on or after January 1, 2020.