Modifies an income tax deduction for contributions to 529 savings accounts

EXPLANATION-Matter enclosed in bold-faced brackets [thus] in this bill is not enacted
and is intended to be omitted in the law.
SECOND REGULAR SESSION
SENATE BILL NO. 1279
103RD GENERAL ASSEMBLY
INTRODUCED BY SENATOR COLEMAN.
5303S.01I KRISTINA MARTIN, Secretary
AN ACT
To repeal section 166.435, RSMo, and to enact in lieu thereof one new section relating to an income
tax deduction for contributions to certain savings accounts.
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Section A. Section 166.435, RSMo, is repealed and one new 1
section enacted in lieu thereof, to be known as section 166.435, 2
to read as follows:3
166.435. 1. Notwithstanding any law to the contrary, 1
the assets of the program held by the board, the assets of 2
any deposit program authorized in section 166.500, and the 3
assets of any qualified tuition program established pursuant 4
to Section 529 of the Internal Revenue Code and any income 5
therefrom shall be exempt from all taxation by the state or 6
any of its political subdivisions. Income earned or 7
received from the program, deposit, or other qualified 8
tuition programs established under Section 529 of the 9
Internal Revenue Code, or refunds of qualified education 10
expenses received by a beneficiary from an eligible 11
educational institution in connection with withdrawal from 12
enrollment at such institution which are contributed within 13
sixty days of withdrawal to a qualified tuition program of 14
which such individual is a beneficiary shall not be subject 15
to state income tax imposed pursuant to chapter 143 and 16
shall be eligible for any benefits provided in accordance 17
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with Section 529 of the Internal Revenue Code. The 18
exemption from taxation pursuant to this section shall apply 19
only to assets and income maintained, accrued, or expended 20
pursuant to the requirements of the program established 21
pursuant to sections 166.400 to 166.455, the deposit program 22
established pursuant to sections 166.500 to 166.529, and 23
other qualified tuition programs established under Section 24
529 of the Internal Revenue Code, and no exemption shall 25
apply to assets and income expended for any other purposes. 26
Annual contributions made to the program held by the board, 27
the deposit program, and any qualified tuition program 28
established under Section 529 of the Internal Revenue Code 29
[up to and including eight thousand dollars per taxpayer, 30
and up to sixteen thousand dollars for married individuals 31
filing a joint tax return,] shall be subtracted in 32
determining Missouri adjusted gross income pursuant to 33
section 143.121. 34
2. If any deductible contributions to or earnings from 35
any such program referred to in this section are distributed 36
and not used to pay qualified education expenses, not 37
transferred as allowed by 26 U.S.C. Section 529(c)(3)(C)(i), 38
as amended, and any Internal Revenue Service regulations or 39
guidance issued in relation thereto, or are not held for the 40
minimum length of time established by the appropriate 41
Missouri board, then the amount so distributed shall be 42
included in the Missouri adjusted gross income of the 43
participant, or, if the participant is not living, the 44
beneficiary. 45
3. The provisions of this section shall apply to tax 46
years beginning on or after January 1, 2008, and the 47
provisions of this section with regard to sections 166.500 48
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to 166.529 shall apply to tax years beginning on or after 49
January 1, 2004. 50
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