First-Time Home Buyer Empowerment Act
Summary
What This Bill Does
The bill adds a special section 529 rule for first-time home purchases. A qualified tuition program account maintained for at least 15 years could distribute older contributions and earnings for a designated beneficiary's principal residence purchase if used within 60 days. Lifetime covered distributions are capped at $35,000, reduced by distributions under a related subparagraph. If a purchase is delayed or canceled, the amount can be recontributed to a 529 or ABLE account within 120 days. If the home is disposed of or stops being the beneficiary's principal residence within five years, tax and interest are recaptured, reduced by 20 percent for each full year after purchase.
Who Benefits and How
First-time homebuyers with long-held 529 accounts, designated beneficiaries, families that over-saved for education, mortgage-ready young adults, and state 529 programs benefit because education savings can be redirected toward a home purchase without immediate income inclusion when the statutory conditions are met. Homebuyers also receive a safety valve if a closing is delayed or canceled because funds can be rolled back into a 529 or ABLE account within 120 days.
Who Bears the Burden and How
IRS and Treasury must administer the new exception, recapture rules, 60-day use period, 120-day recontribution period, five-year residency test, and $35,000 aggregate cap. 529 plan administrators must track account age, contribution timing, designated beneficiaries, distributions, recontributions, and interaction with the related aggregate limitation. Beneficiaries must document first-time homebuyer status, principal residence use, and any later qualifying event that triggers recapture.
Key Provisions
- Creates a 529 distribution exception for first-time home purchases by the designated beneficiary.
- Requires the 529 account to have been maintained for 15 years and limits eligible amounts to older contributions and earnings.
- Caps covered distributions at $35,000, reduced by related prior distributions.
- Allows 120-day recontribution to a 529 or ABLE account when a home purchase is delayed or canceled.
- Requires tax recapture with interest if the home is disposed of or stops being the principal residence within five years.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Lets long-held 529 education accounts make up to $35,000 of tax-favored distributions for a designated beneficiary's first principal residence purchase, with 15-year account seasoning, five-year contribution seasoning, 60-day use, 120-day recontribution for failed purchases, and five-year recapture rules.
Key Policy Areas
tax, housing, education_savings
Primary Purpose
Lets long-held 529 education accounts make up to $35,000 of tax-favored distributions for a designated beneficiary's first principal residence purchase, with 15-year account seasoning, five-year contribution seasoning, 60-day use, 120-day recontribution for failed purchases, and five-year recapture rules.
Policy Domains
Substantive provisions
Identified Gains
- First-time homebuyers
- 529 designated beneficiaries
- Families with education savings
- State 529 programs
Identified Costs
- Internal Revenue Service
- Treasury Department
- 529 plan administrators
- Homebuyers claiming the exception
Sponsors
Legislative Progress
In CommitteeReferred to the House Committee on Ways and Means.
Introduced in House
Mr. Mann (for himself, Mr. Correa, Mr. Alford, Mr. Barrett, …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
First-time homebuyers, Homebuyers claiming the exception
Positive-direction: First-time homebuyers
Negative-direction: Homebuyers claiming the exception
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "agencies"
- → ['Internal Revenue Service', 'Treasury Department']
- "beneficiaries"
- → ['First-time homebuyers', '529 designated beneficiaries', 'State 529 programs']
Key Definitions
Terms defined in this bill
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology