HR7115-119

What This Bill Does

The Jumpstart Savings Act adds new Internal Revenue Code section 529B for state-established Jumpstart Programs. A state or state agency can maintain a tax-exempt program allowing contributions to accounts for a designated beneficiary's qualified occupation, profession, or trade expenses. Qualified expenses include registered apprenticeship completion costs, tuition, fees, books, supplies, and equipment for associate degree or certification programs at community and technical colleges, required certification or licensure fees, tools and equipment used in the trade or occupation, and business start-up costs in the state where the beneficiary will practice the occupation or profession. The program must follow rules similar to several 529 plan requirements, and 529-style tax treatment applies to beneficiaries and contributors. Program officers or employees must report contributions, distributions, and other required information to Treasury and beneficiaries.

Who Benefits and How

Apprentices, community and technical college students, certification students, tradespeople buying tools, workers seeking occupational licenses, new small-business owners, state treasurers, and families saving for non-bachelor career paths benefit because accounts can receive favorable tax treatment for workforce-related expenses. Community colleges and apprenticeship programs benefit from a savings tool targeted to their students.

Who Bears the Burden and How

State program administrators, Treasury and IRS staff, employers, contributors, beneficiaries, and tax preparers must track eligible expenses, contributions, distributions, beneficiary changes, account rules, business start-up costs, and reporting. Federal revenue collections may decline if earnings and distributions receive 529-style tax advantages.

Key Provisions

• Creates new Internal Revenue Code section 529B for state Jumpstart Programs.
• Provides tax-exempt treatment for qualifying state programs while preserving unrelated-business-income tax.
• Allows accounts to pay apprenticeship, community or technical college, certification, licensure, tools, equipment, and state business start-up expenses.
• Applies rules similar to 529 plan contribution and distribution tax rules.
• Requires program officers or designees to report contributions, distributions, and other required information to Treasury and beneficiaries.