Page:United States Statutes at Large Volume 111 Part 1.djvu/837

 PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 813 December 31, 1997, with respect to expenses paid after such date (in taxable years ending after such date), for education furnished in academic periods beginning after such date. (4) COORDINATION WITH EDUCATION SAVINGS BONDS.— The amendment made by subsection (c) shall apply to taxable years beginning after December 31, 1997. (5) ESTATE AND GIFT TAX CHANGES. — i'A) GIFT TAX CHANGES. —Paragraphs (2) and (5) of section 529(c) of the Internal Revenue Code of 1986, as amended by this section, shall apply to transfers (including designations of new beneficiaries) made after the date of the enactment of this Act. (B) ESTATE TAX CHANGES.— Paragraph (4) of such section 529(c) shall apply to estates of decedents dying after June 8, 1997. (6) TRANSITION RULE FOR PRE-AUGUST 20, 1996 CONTRACTS. — In the case of any contract issued prior to August 20, 1996, section 529(c)(3)(C) of the Internal Revenue Code of 1986 shall be applied for taxable years ending after August 20, 1996, without regard to the requirement that a distribution be transferred to a member of the family or the requirement that a change in beneficiaries may be made only to a member of the family, PART II—EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS SEC. 213. EDUCATION INDIVTOUAL RETIREMENT ACCOUNTS. (a) IN GENERAL. — Part VIII of subchapter F of chapter 1 (relating to qualified State tuition programs) is amended by adding at the end the following new section: "SEC. 530. EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS. "(a) GENERAL RULE.—An education individual retirement account shall be exempt from taxation under this subtitle. Notwithstanding the preceding sentence, the education individual retirement account shall be subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable organizations). "(b) DEFINITIONS AND SPECIAL RULES. —For purposes of this section— "(1) EDUCATION INDIVIDUAL RETIREMENT ACCOUNT.—The term 'education individual retirement account' means a trust created or organized in the United States exclusively for the purpose of paying the qualified higher education expenses of the designated beneficiary of the trust (and designated as an education individual retirement account at the time created or organized), but only if the written governing instrument creating the trust meets the following requirements: "(A) No contribution will be accepted— "(i) unless it is in cash, "(ii) after the date on which such beneficiary attains age 18, or "(iii) except in the case of rollover contributions, if such contribution would result in aggregate contributions for the taxable year exceeding $500.

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