HF 2160 (LSB 5920YH (5) 90)

HOUSE FILE 2160

BY  STAED, WILBURN, KURTH, AMOS JR., CAHILL, STECKMAN, LEVIN, MADISON, CROKEN, JACOBY, KRESSIG, BROWN-POWERS, and WILSON

A BILL FOR

An Act excluding from the individual income tax certain direct trustee-to-trustee transfers from educational savings plan trust accounts to Roth individual retirement accounts, and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.7, subsection 22, paragraph c, subparagraph (1), Code 2024, is amended by adding the following new subparagraph division:
   NEW SUBPARAGRAPH DIVISION.  (g)  A direct trustee-to-trustee transfer to a Roth individual retirement account in accordance with section 529(c)(3)(E) of the Internal Revenue Code, as enacted by the federal Consolidated Appropriations Act, 2023, Pub. L. No. 117-328.
    Sec. 2.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2024, 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.
   Under the federal Consolidated Appropriations Act, 2023, Pub. L. No. 117-328, transfers from a 529 educational account to a Roth individual retirement account beneficiary are exempt from federal taxation, subject to Roth contribution limits and the aggregate lifetime limit of $35,000, and if the 529 educational account has existed for at least 15 years. This bill also makes such a transfer exempt from state individual income taxation.
   The bill applies retroactively to tax years beginning on or after January 1, 2024.