HB 2705

                                 SECOND REGULAR SESSION
                    HOUSE BILL NO. 2705
                           103RD GENERAL ASSEMBLY
                           INTRODUCED BY REPRESENTATIVE HRUZA.
 6444H.01I  JOSEPH ENGLER, Chief Clerk
                                            AN ACT
 To repeal section 166.435, RSMo, and to enact in lieu thereof one new section relating to
        contributions to qualified tuition programs.
 Be it enacted by the General Assembly of the state of Missouri, as follows:
         Section A. Section 166.435, RSMo, is repealed and one new section enacted in lieu
2 thereof, to be known as section 166.435, to read as follows:
         166.435. 1. Notwithstanding any law to the contrary, the assets of the program held
2 by the board, the assets of any deposit program authorized in section 166.500, and the assets
3 of any qualified tuition program established pursuant to Section 529 of the Internal Revenue
4 Code and any income therefrom shall be exempt from all taxation by the state or any of its
5 political subdivisions. Income earned or received from the program, deposit, or other
6 qualified tuition programs established under Section 529 of the Internal Revenue Code, or
7 refunds of qualified education expenses received by a beneficiary from an eligible
8 educational institution in connection with withdrawal from enrollment at such institution
9 which are contributed within sixty days of withdrawal to a qualified tuition program of which
10 such individual is a beneficiary shall not be subject to state income tax imposed pursuant to
11 chapter 143 and shall be eligible for any benefits provided in accordance with Section 529 of
12 the Internal Revenue Code. The exemption from taxation pursuant to this section shall apply
13 only to assets and income maintained, accrued, or expended pursuant to the requirements of
14 the program established pursuant to sections 166.400 to 166.455, the deposit program
15 established pursuant to sections 166.500 to 166.529, and other qualified tuition programs
16 established under Section 529 of the Internal Revenue Code, and no exemption shall apply to
17 assets and income expended for any other purposes. Annual contributions made only to the
 EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is
 intended to be omitted from the law. Matter in bold-face type in the above bill is proposed language.
HB 2705  2
18 [program held by the board, the] deposit program[, and any qualified tuition] or the Missouri
19 education program established under [Section 529 of the Internal Revenue Code] sections
20 166.400 to 166.455, or both, up to and including eight thousand dollars per taxpayer, and up
21 to sixteen thousand dollars for married individuals filing a joint tax return, shall be subtracted
22 in determining Missouri adjusted gross income pursuant to section 143.121.
232. If any deductible contributions to or earnings from any such program referred to in
24 this section are distributed and not used to pay qualified education expenses, not transferred
25 as allowed by 26 U.S.C. Section 529(c)(3)(C)(i), as amended, and any Internal Revenue
26 Service regulations or guidance issued in relation thereto, or are not held for the minimum
27 length of time established by the appropriate Missouri board, then the amount so distributed
28 shall be included in the Missouri adjusted gross income of the participant, or, if the participant
29 is not living, the beneficiary.
303. The provisions of this section shall apply to tax years beginning on or after January
31 1, 2008, and the provisions of this section with regard to sections 166.500 to 166.529 shall
32 apply to tax years beginning on or after January 1, 2004.
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