529 and ABLE Account Improvement Act of 2016

[AI summary unavailable — showing source text] 529 and ABLE Account Improvement Act of 2016 This bill amends the Internal Revenue Code to modify the tax treatment of qualified tuition programs (known as 529 plans) and ABLE accounts. (Tax-favored ABLE [Achieving a Better Life Experience] accounts are designed to enable individuals with disabilities to save for and pay for disability-related expenses.) The bill excludes from gross income a fringe benefit consisting of up to $100 per year (adjusted for inflation after 2016) of employer contributions to an employee's 529 or ABLE account. The employer contribution must be made: (1) to an account for which the designated beneficiary is the employee or a member of the employee's family, and (2) in connection with a payroll deduction contribution program established by the employer. The bill also: (1) expands the tax credit for small employer pension plan startup costs to include the costs of establishing a payroll deduction contribution program for 529 plans and ABLE accounts; (2) permits 529 funds to be used for transfers to an Individual Retirement Account (IRA), education loan payments, or charitable contributions without being subject to the additional tax for distributions that a…