Bill Text: IA HSB190 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act providing for the establishment of first-time homebuyer savings accounts in Iowa, including related individual income tax exemptions, and including applicability provisions.
Spectrum: Committee Bill
Status: (N/A - Dead) 2017-03-28 - Committee report, recommending amendment and passage. H.J. 805. [HSB190 Detail]
Download: Iowa-2017-HSB190-Introduced.html
House
Study
Bill
190
-
Introduced
HOUSE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
WAYS
AND
MEANS
BILL
BY
CHAIRPERSON
VANDER
LINDEN)
A
BILL
FOR
An
Act
providing
for
the
establishment
of
first-time
homebuyer
1
savings
accounts
in
Iowa,
including
related
individual
2
income
tax
exemptions,
and
including
applicability
3
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
TLSB
2280YC
(2)
87
mm/sc
H.F.
_____
Section
1.
Section
422.7,
Code
2017,
is
amended
by
adding
1
the
following
new
subsection:
2
NEW
SUBSECTION
.
41.
a.
Subject
to
the
restrictions
in
3
paragraph
“b”
,
subtract
the
sum
of
the
following
amounts:
4
(1)
The
amount
of
contributions
made
by
an
account
holder
5
during
the
tax
year
to
the
account
holder’s
first-time
6
homebuyer
savings
accounts,
not
to
exceed
the
following
annual
7
limit:
8
(a)
(i)
For
married
taxpayers
who
file
a
joint
return
and
9
maintain
a
joint
first-time
homebuyer
savings
account,
four
10
thousand
dollars.
11
(ii)
For
any
other
account
holder,
two
thousand
dollars.
12
(b)
For
the
tax
year
beginning
in
the
2018
calendar
year
13
and
for
each
subsequent
tax
year,
the
director
shall
multiply
14
each
dollar
amount
set
forth
in
subparagraph
subdivisions
(i)
15
and
(ii)
by
the
latest
cumulative
inflation
factor,
shall
16
round
off
the
resulting
product
to
the
nearest
one
dollar,
17
and
shall
incorporate
the
result
into
the
income
tax
forms
18
and
instructions
for
each
tax
year.
For
purposes
of
this
19
subparagraph
division,
“cumulative
inflation
factor”
means
the
20
product
of
the
annual
inflation
factor
for
the
2018
calendar
21
year
and
all
annual
inflation
factors
for
subsequent
calendar
22
years
as
determined
by
section
422.4,
subsection
1,
paragraph
23
“a”
.
The
cumulative
inflation
factor
applies
to
all
tax
years
24
beginning
on
or
after
January
1
of
the
calendar
year
for
25
which
the
latest
annual
inflation
factor
has
been
determined.
26
Notwithstanding
any
other
provision,
the
annual
inflation
27
factor
for
the
2018
calendar
year
is
one
hundred
percent.
28
(2)
To
the
extent
included,
income
from
interest
and
29
earnings
received
from
the
account
holder’s
first-time
30
homebuyer
savings
accounts.
31
b.
(1)
The
subtraction
in
paragraph
“a”
shall
not
exceed
32
the
following
aggregate
lifetime
limit:
33
(a)
For
married
taxpayers
who
file
a
joint
return
and
34
maintain
a
joint
first-time
homebuyer
savings
account,
an
35
-1-
LSB
2280YC
(2)
87
mm/sc
1/
11
H.F.
_____
amount
equal
to
the
product
of
the
deductible
amount
determined
1
for
the
year
in
paragraph
“a”
,
subparagraph
(1),
subparagraph
2
division
(a),
subparagraph
subdivision
(i),
multiplied
by
ten.
3
(b)
For
any
other
account
holder,
an
amount
equal
to
the
4
product
of
the
deductible
amount
determined
for
the
year
in
5
paragraph
“a”
,
subparagraph
(1),
subparagraph
division
(a),
6
subparagraph
subdivision
(ii),
multiplied
by
ten.
7
(2)
The
subtraction
in
paragraph
“a”
shall
not
be
allowed
to
8
an
account
holder
upon
one
of
the
following
dates,
whichever
9
occurs
first:
10
(a)
January
1
of
the
tenth
calendar
year
after
the
calendar
11
year
during
which
the
account
holder
first
opened
a
first-time
12
homebuyer
savings
account.
13
(b)
The
date
on
which
funds
within
an
account
holder’s
14
first-time
homebuyer
savings
account
are
withdrawn
for
purposes
15
other
than
the
payment
or
reimbursement
of
the
designated
16
beneficiary’s
eligible
home
costs
in
connection
with
a
17
qualified
home
purchase.
Any
amount
transferred
between
18
different
first-time
homebuyer
savings
accounts
of
the
same
19
account
holder
by
a
person
other
than
the
account
holder
20
shall
not
be
considered
a
withdrawal
for
purposes
of
this
21
subparagraph
division
(b).
22
c.
(1)
Add,
to
the
extent
previously
deducted
under
23
paragraph
“a”
,
subparagraph
(1),
the
amount
withdrawn
during
24
the
tax
year
from
an
account
holder’s
first-time
homebuyer
25
savings
account
for
purposes
other
than
the
payment
or
26
reimbursement
of
the
designated
beneficiary’s
eligible
home
27
costs
in
connection
with
a
qualified
home
purchase.
28
(2)
For
purposes
of
this
paragraph
“c”
,
any
amount
remaining
29
in
an
account
holder’s
first-time
homebuyer
savings
account
30
on
January
1
of
the
tenth
calendar
year
after
the
calendar
31
year
during
which
the
account
holder
first
opened
a
first-time
32
homebuyer
savings
account
shall
be
considered
immediately
33
withdrawn
under
subparagraph
(1).
34
(3)
For
purposes
of
this
paragraph
“c”
,
the
transfer
of
35
-2-
LSB
2280YC
(2)
87
mm/sc
2/
11
H.F.
_____
amounts
between
different
first-time
homebuyer
accounts
of
the
1
same
account
holder
by
a
person
other
than
the
account
holder
2
shall
not
cause
such
transfer
to
be
considered
a
withdrawal
3
under
subparagraph
(1).
4
d.
For
any
amount
considered
a
withdrawal
required
to
be
5
added
to
net
income
pursuant
to
paragraph
“c”
,
the
account
6
holder
shall
be
assessed
a
penalty
equal
to
ten
percent
of
7
the
amount
of
the
withdrawal.
The
penalty
shall
not
apply
8
to
withdrawals
made
by
reason
of
the
death
or
disability
of
9
the
account
holder,
or
to
withdrawals
made
pursuant
to
a
10
garnishment,
levy,
or
other
order,
including
but
not
limited
to
11
an
order
in
bankruptcy
following
a
filing
for
protection
under
12
the
federal
bankruptcy
code,
11
U.S.C.
§101
et
seq.
13
e.
For
purposes
of
this
subsection,
“account
holder”
,
14
“designated
beneficiary”
,
“eligible
home
costs”
,
“first-time
15
homebuyer
savings
account”
,
and
“qualified
home
purchase”
mean
16
the
same
as
defined
in
section
541B.2.
17
Sec.
2.
Section
422.9,
subsection
2,
Code
2017,
is
amended
18
by
adding
the
following
new
paragraph:
19
NEW
PARAGRAPH
.
k.
Subtract
interest,
taxes,
and
other
20
miscellaneous
expenses
deductible
for
federal
income
tax
21
purposes
to
the
extent
such
amounts
are
eligible
home
costs
22
in
connection
with
a
qualified
home
purchase
that
were
paid
23
or
reimbursed
from
funds
in
a
first-time
homebuyer
savings
24
account.
For
purposes
of
this
paragraph,
“eligible
home
costs”
,
25
“
first-time
homebuyer
savings
account”
,
and
“qualified
home
26
purchase”
mean
the
same
as
defined
in
section
541B.2.
27
Sec.
3.
NEW
SECTION
.
541B.1
Short
title.
28
This
chapter
may
be
cited
as
the
“Iowa
First-Time
Homebuyer
29
Savings
Account
Act”
.
30
Sec.
4.
NEW
SECTION
.
541B.2
Definitions.
31
As
used
in
this
chapter,
unless
the
context
otherwise
32
requires:
33
1.
“Account
holder”
means
an
individual
who
establishes,
34
either
individually
or
jointly
with
the
individual’s
spouse,
35
-3-
LSB
2280YC
(2)
87
mm/sc
3/
11
H.F.
_____
a
first-time
homebuyer
savings
account
pursuant
to
section
1
541B.3.
2
2.
“Department”
means
the
department
of
revenue.
3
3.
“Designated
beneficiary”
means
an
individual
meeting
the
4
requirements
of
section
541B.3,
subsection
2,
and
designated
5
by
an
account
holder
as
beneficiary
of
the
account
holder’s
6
first-time
homebuyer
savings
account
pursuant
to
section
7
541B.3,
subsection
2.
8
4.
a.
“Eligible
home
costs”
means
the
following:
9
(1)
The
down
payment
for
the
purchase
of
a
single-family
10
residence
in
Iowa
by
a
designated
beneficiary.
11
(2)
A
cost,
fee,
tax,
or
payment
incurred
by,
or
charged
12
or
assigned
to,
a
designated
beneficiary
for
the
purchase
of
a
13
single-family
residence
in
Iowa,
and
listed
on
the
statement
14
of
receipts
and
disbursements
for
the
sale,
including
any
15
statement
prescribed
by
12
C.F.R.
§1026.38,
as
amended.
16
b.
“Eligible
home
costs”
includes
any
United
States
veterans
17
administration
funding
fee
incurred
by,
or
charged
or
assigned
18
to,
a
designated
beneficiary
in
connection
with
a
veterans
19
administration
home
loan
guaranty
program.
20
5.
“Financial
institution”
means
a
state
or
federally
21
chartered
bank,
savings
and
loan
association,
credit
union,
or
22
trust
company
in
this
state.
23
6.
“First-time
homebuyer”
means
an
individual
who
is
a
24
resident
of
Iowa
and
who
has
not
owned
or
purchased,
either
25
individually
or
jointly,
a
single-family
residence
for
a
period
26
of
three
years
prior
to
the
date
of
the
qualified
home
purchase
27
for
which
the
eligible
home
costs
are
paid
or
reimbursed
from
a
28
first-time
homebuyer
savings
account.
29
7.
“First-time
homebuyer
savings
account”
means
an
account
30
that
meets
the
requirements
of
sections
541B.3
and
541B.4
and
31
that
was
established
for
the
purpose
of
paying
or
reimbursing
a
32
qualified
beneficiary’s
eligible
home
costs
in
connection
with
33
a
qualified
home
purchase.
34
8.
“Individual”
means
a
natural
person.
35
-4-
LSB
2280YC
(2)
87
mm/sc
4/
11
H.F.
_____
9.
“Qualified
home
purchase”
means,
with
respect
to
a
1
first-time
homebuyer
savings
account,
the
purchase
of
a
2
single-family
residence
in
Iowa
by
the
account’s
designated
3
beneficiary
after
the
date
the
account
holder
first
opened
a
4
first-time
homebuyer
savings
account.
5
10.
“Resident”
means
the
same
as
defined
in
section
422.4.
6
11.
“Single-family
residence”
means
a
single-family
7
residence
owned
and
occupied
by
a
designated
beneficiary
as
the
8
designated
beneficiary’s
principal
residence,
including
but
not
9
limited
to
a
manufactured
home,
mobile
home,
condominium
unit,
10
or
cooperative.
11
Sec.
5.
NEW
SECTION
.
541B.3
First-time
homebuyer
savings
12
account.
13
1.
Establishment
of
account.
14
a.
Beginning
January
1,
2018,
an
individual
may
open
an
15
interest-bearing
savings
account
with
a
financial
institution
16
and
designate
the
entire
account
as
a
first-time
homebuyer
17
savings
account
for
the
purpose
of
paying
or
reimbursing
a
18
designated
beneficiary’s
eligible
home
costs
in
connection
with
19
a
qualified
home
purchase.
The
first-time
homebuyer
savings
20
account
designation
shall
be
made
no
later
than
April
30
of
the
21
year
following
the
tax
year
during
which
the
account
is
opened,
22
on
forms
provided
by
the
department.
23
b.
A
married
couple
electing
to
file
a
joint
Iowa
individual
24
income
tax
return
may
establish
a
joint
first-time
homebuyer
25
savings
account.
Married
taxpayers
electing
to
file
separate
26
tax
returns
or
separately
on
a
combined
tax
return
for
Iowa
tax
27
purposes
shall
not
establish
or
maintain
a
joint
first-time
28
homebuyer
savings
account.
29
c.
An
individual
may
establish
more
than
one
first-time
30
homebuyer
savings
account,
provided
each
account
has
a
31
different
designated
beneficiary.
32
2.
Designation
of
beneficiary.
33
a.
The
account
holder
shall
designate
one
individual
as
34
beneficiary
of
the
first-time
homebuyer
savings
account.
The
35
-5-
LSB
2280YC
(2)
87
mm/sc
5/
11
H.F.
_____
designation
shall
be
made
on
forms
provided
by
the
department
1
and
no
later
than
April
30
of
the
year
following
the
tax
year
2
during
which
the
account
is
opened.
The
account
holder
may
3
change
the
designated
beneficiary
of
the
first-time
homebuyer
4
savings
account
at
any
time.
5
b.
The
account
holder
and
designated
beneficiary
of
6
a
first-time
homebuyer
savings
account
may
be
the
same
7
individual.
8
c.
An
individual
may
be
the
designated
beneficiary
of
more
9
than
one
first-time
homebuyer
savings
account.
10
d.
The
designated
beneficiary
of
a
first-time
homebuyer
11
savings
account
must
be
a
first-time
homebuyer.
12
Sec.
6.
NEW
SECTION
.
541B.4
Account
administration
——
13
account
holder
responsibilities.
14
1.
Account
contributions.
Contributions
to
a
first-time
15
homebuyer
savings
account
may
be
made
by
any
person
in
the
form
16
of
cash.
There
is
no
limitation
on
the
amount
of
contributions
17
that
may
be
made
to
or
retained
in
a
first-time
homebuyer
18
savings
account.
19
2.
Account
expenses.
The
account
holder
shall
not
use
funds
20
held
in
a
first-time
homebuyer
savings
account
to
pay
expenses,
21
if
any,
of
administering
the
account,
except
that
all
fees
and
22
charges
assessed
by
the
financial
institution
may
be
deducted
23
from
the
account
by
the
financial
institution
where
the
account
24
is
held.
25
3.
Required
reports.
The
account
holder
shall
submit
the
26
following
information
to
the
department:
27
a.
An
annual
report
for
the
first-time
homebuyer
savings
28
account
on
forms
furnished
by
the
department.
The
report
shall
29
be
included
with
the
Iowa
income
tax
return
of
the
account
30
holder.
31
b.
A
copy
of
the
federal
internal
revenue
service
form
32
1099,
or
other
similar
federal
internal
revenue
service
income
33
reporting
form,
if
any,
issued
for
the
first-time
homebuyer
34
savings
account
to
the
account
holder
by
the
financial
35
-6-
LSB
2280YC
(2)
87
mm/sc
6/
11
H.F.
_____
institution
where
the
account
is
held.
The
form
shall
be
1
included
with
the
Iowa
income
tax
return
of
the
account
holder.
2
c.
Upon
a
withdrawal
of
funds
from
a
first-time
homebuyer
3
savings
account,
a
transaction
report
on
forms
furnished
by
the
4
department.
5
4.
Withdrawal
of
funds.
The
account
holder
may
withdraw
6
funds
from
a
first-time
homebuyer
savings
account
at
any
time.
7
Sec.
7.
NEW
SECTION
.
541B.5
Financial
institution
8
protections.
9
Nothing
in
this
chapter
shall
be
construed
to
require
a
10
financial
institution
to
do
any
of
the
following,
or
to
be
11
responsible
or
liable
for
any
of
the
following:
12
1.
Designate
or
label
within
the
financial
institution’s
13
account
contracts,
systems,
or
in
any
other
manner,
an
account
14
as
a
first-time
homebuyer
savings
account.
15
2.
Ascertain
or
verify
the
purpose
of
a
withdrawal
of
funds
16
from
a
first-time
homebuyer
savings
account,
or
track
the
17
destination
or
use
of
the
withdrawn
funds.
18
3.
Allocate
funds
in
a
first-time
homebuyer
savings
account
19
to
a
designated
beneficiary
or
among
joint
account
holders.
20
4.
Report
any
information
to
the
department
or
any
other
21
governmental
agency.
22
5.
Determine
or
ensure
that
an
account
satisfies
the
23
requirements
to
be
a
first-time
homebuyer
savings
account.
24
6.
Determine
or
ensure
that
funds
withdrawn
from
a
25
first-time
homebuyer
savings
account
are
used
for
the
payment
26
or
reimbursement
of
a
designated
beneficiary’s
eligible
home
27
costs
in
connection
with
a
qualified
home
purchase.
28
7.
Report
or
remit
taxes
or
penalties
related
to
the
29
ownership
or
use
of
a
first-time
homebuyer
savings
account.
30
8.
Include
the
name
of
a
beneficiary
in
the
title
of
a
31
first-time
homebuyer
savings
account,
or
document
the
change
of
32
any
beneficiary
to
a
first-time
homebuyer
savings
account.
33
Sec.
8.
NEW
SECTION
.
541B.6
Tax
considerations.
34
The
state
income
tax
treatment
of
a
first-time
homebuyer
35
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savings
account
shall
be
as
provided
in
section
422.7,
1
subsection
41,
and
section
422.9,
subsection
2,
paragraph
“k”
.
2
Sec.
9.
NEW
SECTION
.
541B.7
Rules
and
forms.
3
1.
The
department
shall
adopt
rules
to
implement
and
4
administer
this
chapter.
5
2.
The
department
shall
create
and
make
available
forms
6
to
be
used
in
complying
with
this
chapter,
including
but
not
7
limited
to
the
following:
8
a.
A
form
for
designating
an
account
as
a
first-time
9
homebuyer
savings
account
pursuant
to
section
541B.3,
10
subsection
1,
paragraph
“a”
.
11
b.
A
form
for
designating
an
individual
as
beneficiary
of
12
a
first-time
homebuyer
savings
account
pursuant
to
section
13
541B.3,
subsection
2,
paragraph
“a”
.
14
c.
A
first-time
homebuyer
savings
account
annual
report
15
as
required
in
section
541B.4,
subsection
3,
paragraph
“a”
.
16
The
report
shall
require,
at
a
minimum,
a
list
of
transactions
17
occurring
on
the
account
during
the
tax
year,
and
shall
18
identify
any
supporting
documentation
to
be
included
with
the
19
report
or
maintained
by
the
taxpayer.
20
d.
A
transaction
report
as
required
in
section
541B.4,
21
subsection
3,
paragraph
“c”
,
which
report
shall
require,
at
a
22
minimum,
information
regarding
the
eligible
home
costs
to
which
23
any
withdrawn
funds
were
applied
in
connection
with
a
qualified
24
home
purchase,
and
information
regarding
the
amount
of
funds
25
remaining,
if
any,
in
a
first-time
homebuyer
savings
account.
26
Sec.
10.
APPLICABILITY.
The
following
provision
or
27
provisions
of
this
Act
apply
to
tax
years
beginning
on
or
after
28
January
1,
2018:
29
1.
The
section
of
this
Act
enacting
section
422.7,
30
subsection
41.
31
2.
The
section
of
this
Act
enacting
section
422.9,
32
subsection
2,
paragraph
“k”.
33
EXPLANATION
34
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
35
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the
explanation’s
substance
by
the
members
of
the
general
assembly.
1
This
bill
allows
individuals,
on
or
after
January
1,
2018,
2
to
open
an
interest-bearing
savings
account
with
a
state
3
or
federally
chartered
bank,
savings
and
loan
association,
4
credit
union,
or
trust
company
in
this
state
and
designate
the
5
account
as
a
first-time
homebuyer
savings
account
(account)
6
for
the
purpose
of
financing
the
purchase
of
a
single-family
7
residence
in
this
state
by
a
first-time
homebuyer.
“First-time
8
homebuyer”
is
defined
in
the
bill
to
include
Iowa
residents
who
9
have
not
owned
a
single-family
residence
for
at
least
three
10
years
prior
to
the
home
purchase
for
which
the
account’s
funds
11
are
applied.
“Single-family
residence”
is
also
defined
in
the
12
bill.
The
account
may
be
established
individually,
or
jointly
13
with
a
spouse
if
the
married
couple
files
a
joint
Iowa
income
14
tax
return.
15
In
order
to
properly
establish
the
account,
the
bill
16
requires
the
account
holder
to
submit
certain
forms
to
the
17
department
of
revenue
(department)
designating
the
account
as
18
a
first-time
homebuyer
savings
account,
and
designating
one
19
beneficiary
of
the
account
(designated
beneficiary).
These
20
designation
forms
must
be
submitted
no
later
than
April
30
of
21
the
year
following
the
tax
year
during
which
the
account
is
22
opened.
An
individual
may
establish
more
than
one
account,
23
provided
each
account
has
a
different
designated
beneficiary.
24
The
account
holder
may
change
the
designated
beneficiary
at
any
25
time,
and
may
designate
himself
or
herself
as
the
beneficiary.
26
In
addition,
an
individual
may
be
the
designated
beneficiary
27
of
more
than
one
account.
The
designated
beneficiary
must
be
28
a
first-time
homebuyer.
29
Contributions
to
an
account
may
be
made
in
the
form
of
cash
30
by
any
person
and
in
any
amount.
There
is
no
limitation
on
the
31
amount
that
may
be
retained
in
an
account.
In
addition,
the
32
account
holder
may
withdraw
funds
from
an
account
at
any
time.
33
Account
funds
shall
not
be
used
to
pay
expenses,
if
any,
of
34
administering
the
account,
except
that
fees
and
charges
may
be
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deducted
from
the
account
by
the
financial
institution
where
1
the
account
is
held.
The
bill
requires
an
account
holder
to
2
submit
certain
reports
to
the
department,
including
an
annual
3
report
for
the
account,
a
transaction
report
upon
a
withdrawal
4
of
funds
from
the
account,
and
a
copy
of
any
federal
Internal
5
Revenue
Service
form
1099
or
other
similar
income
statement
6
issued
for
the
account.
7
The
bill
provides
protection
to
financial
institutions
from
8
being
required
to
perform,
and
from
being
responsible
or
liable
9
for,
certain
activities
as
described
in
the
bill
with
respect
10
to
accounts.
The
bill
requires
the
department
to
create
the
11
forms
required
to
be
filed
by
account
holders,
and
to
adopt
12
rules
to
implement
and
administer
the
bill.
13
The
bill
provides
two
individual
income
tax
incentives
14
relating
to
the
accounts.
First,
an
account
holder
is
15
allowed
to
deduct
from
the
individual
income
tax
the
amount
of
16
contributions
made
during
the
year
by
the
account
holder
to
17
the
account
holder’s
accounts,
not
to
exceed
$2,000
per
year,
18
or
$4,000
for
married
taxpayers
with
a
joint
account.
These
19
amounts
are
adjusted
for
inflation
each
calendar
year.
Second,
20
the
bill
exempts
from
the
individual
income
tax
any
interest
21
or
earnings
received
from
the
account
holder’s
accounts.
22
The
total
amount
that
may
be
deducted
or
excluded
from
the
23
individual
income
tax
for
these
two
tax
incentives
cannot
24
exceed
an
aggregate
lifetime
limit
of
10
times
the
maximum
25
deduction
determined
above
for
the
applicable
year
($20,000
for
26
2016),
or
double
that
amount
for
married
taxpayers
with
a
joint
27
account
($40,000
for
2016).
The
account
holder’s
ability
to
28
claim
the
tax
incentives
ends
10
tax
years
after
the
tax
year
29
the
account
holder
first
opened
an
account,
or
on
the
date
when
30
account
funds
are
withdrawn
for
purposes
other
than
the
payment
31
or
reimbursement
of
the
designated
beneficiary’s
eligible
32
home
costs
in
connection
with
a
qualified
home
purchase
33
(nonqualified
withdrawal),
whichever
occurs
first.
“Eligible
34
home
costs”
and
“qualified
home
purchase”
are
both
defined
in
35
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the
bill.
Amounts
transferred
between
different
accounts
of
1
the
same
account
holder
by
a
person
other
than
the
account
2
holder
are
not
considered
a
nonqualified
withdrawal
that
would
3
cause
loss
of
the
ability
to
claim
the
tax
incentives.
4
The
bill
requires
an
account
holder
to
add
to
net
income
for
5
purposes
of
calculating
the
individual
income
tax
any
amount
of
6
a
nonqualified
withdrawal
from
an
account
to
the
extent
it
was
7
previously
deducted
as
a
contribution,
but
amounts
transferred
8
between
different
accounts
of
the
same
account
holder
by
9
a
person
other
than
the
account
holder
are
not
considered
10
nonqualified
withdrawals.
In
addition,
any
amount
remaining
in
11
an
account
holder’s
account
on
January
1
of
the
10th
calendar
12
year
after
the
calendar
year
during
which
the
account
holder
13
first
opened
an
account
is
considered
to
be
a
nonqualified
14
withdrawal
that
must
be
added
to
net
income
for
the
tax
year
15
beginning
in
that
10th
year,
to
the
extent
it
was
previously
16
deducted
as
a
contribution.
Nonqualified
withdrawals
required
17
to
be
added
to
net
income
are
also
subject
to
a
penalty
equal
18
to
10
percent
of
the
nonqualified
withdrawal,
unless
the
19
withdrawal
was
made
by
reason
of
the
death
or
disability
of
the
20
account
holder,
or
was
made
pursuant
to
a
garnishment,
levy,
21
or
other
order,
including
an
order
in
bankruptcy
following
a
22
filing
for
protection
under
the
federal
bankruptcy
code.
23
Finally,
the
bill
prohibits
the
amount
of
eligible
home
24
costs
in
connection
with
a
qualified
home
purchase
that
are
25
paid
or
reimbursed
from
funds
in
an
account
from
being
allowed
26
as
an
itemized
deduction
for
Iowa
individual
income
tax
27
purposes.
28
The
tax
provisions
of
the
bill
apply
to
tax
years
beginning
29
on
or
after
January
1,
2018.
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