Page:United States Statutes at Large Volume 111 Part 1.djvu/838

 Ill STAT. 814 PUBLIC LAW 105-34—AUG. 5, 1997 "(B) The trustee is a bank (as defined in section 408(n)) or another person who demonstrates to the satisfaction of the Secretary that the memner in which that person will administer the trust will be consistent with the requirements of this section or who has so demonstrated with respect to any individual retirement plan. "(C) No part of the trust assets will be invested in life insurance contracts. "(D) The assets of the trust shall not be commingled with other property except in a common trust fund or common investment fund. "(E) Upon the death of the designated beneficiary, any balance to the credit of the beneficiary shall be distributed within 30 days after the date of death to the estate of such beneficiary. " (2) QUALIFIED HIGHER EDUCATION EXPENSES.— "(A) IN GENERAL.— The term 'qualified higher education expenses' has the meaning given such term by section 529(e)(3), reduced as provided in section 25A(g)(2). "(B) QUALIFIED STATE TUITION PROGRAMS.— Such term shall include amounts paid or incurred to purchase tuition credits or certificates, or to make contributions to an account, under a qualified State tuition program (as defined in section 529(b)) for the benefit of the beneficiary of the account. "(3) ELIGIBLE EDUCATIONAL INSTITUTION.—The term 'eligible educational institution' has the meaning given such term by section 529(e)(5). " (c) REDUCTION IN PERMITTED CONTRIBUTIONS BASED ON ADJUSTED GROSS INCOME.— "(1) IN GENERAL.— The maximum amount which a contributor could otherwise make to an account under this section shall be reduced by an amount which bears the same ratio to such maximum amount as— "(A) the excess of— "(i) the contributor's modified adjusted gross income for such taxable year, over "(ii) $95,000 ($150,000 in the case of a joint return), bears to "(B) $15,000 ($10,000 in the case of a joint return). " (2) MODIFIED ADJUSTED GROSS INCOME.— For purposes of paragraph (1), the term 'modified adjusted gross income' means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933. " (d) TAX TREATMENT OF DISTRIBUTIONS.— "(1) IN GENERAL.— Any distribution shall be includible in the gross income of the distributee in the manner as provided in section 72(b). " (2) DISTRIBUTIONS FOR QUALIFIED HIGHER EDUCATION EXPENSES.— "(A) IN GENERAL.—No amount shall be includible in gross income under paragraph (1) if the qualified higher education expenses of the designated beneficiary during the taxable year are not less than the aggregate distributions during the taxable year.

�