; and (B) are— (i) postsecondary educational expenses (as defined in section 529 of the Internal Revenue Code of 1986) of the individual; (ii) for the purchase of a first home by the individual; or (iii) for the capitalization of a business owned by the individual. I Amendments to the Social Security Act 101. Interest in, and distribution from, a qualified tuition program required to be disregarded under the TANF program (a) In general Section 408(a) of the Social Security Act ( 42 U.S.C. 608(a) ) is amended by adding at the end the following: (13) Requirement to disregard interest in, and distribution from, a qualified tuition program A State to which a grant is made under section 403 shall disregard the value of any interest in, or distribution from, a qualified tuition program (as defined in section 529(b) of the Internal Revenue Code of 1986), in determining the eligibility of, and the amount or type of assistance to be provided to an individual or family under the State program funded under this part. . (b) Penalty for noncompliance (1) In general Section 409(a) of such Act ( 42 U.S.C. 609(a) ) is amended by adding at the end the following: (17) Penalty for failure to disregard interest in, or distribution from, a qualified tuition program (A) In general If the Secretary finds that a State to which a grant is made under section 403 for a fiscal year has failed to comply with section 408(a)(13) during the fiscal year, the Secretary shall reduce the grant otherwise payable to the State under section 403(a)(1) for the succeeding fiscal year by the percentage specified in subparagraph (B) of this paragraph. (B) Amount of reduction The reduction required under subparagraph (A) shall be— (i) not less than 1 nor more than 2 percent; (ii) not less than 2 nor more than 3 percent, if the finding is the second consecutive finding made pursuant to subparagraph (A)