; and (C) in the case of a program in which contributions are made to an account that is established for the purpose of meeting the qualified higher education expenses of a dependent student who is the designated beneficiary of the account, the highest monthly balance of such account in the period of four years preceding the date of application for aid under this title. . 3. Withdrawals for higher education expenses (a) 401 (k) plans Paragraph (14) of section 401(k) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: (C) Distributions for qualified higher education expenses (i) In general A distribution shall be treated as made upon hardship of the employee to the extent that the aggregate amount of such distributions during the taxable year does not exceed the lesser of— (I) the amount paid by the taxpayer for qualified higher education expenses during such taxable year, or (II) $5,250. (ii) Distribution must be otherwise disallowed Clause (i) shall not apply to any distribution which is permissible under paragraph (2)(B)(i) (including distributions which would be treated as made upon hardship of the employee without regard to this subparagraph). (iii) No requirement to demonstrate hardship Clause (i) shall apply without regard to any requirement to demonstrate financial need or hardship, or to demonstrate that other assets are not available to pay the qualified higher education expenses. (iv) Additional tax under section 72(t) not to apply No tax shall be imposed under section 72(t) on any amount treated as a hardship distribution by reason of clause (i). (v) Qualified higher education expenses For purposes of this subparagraph, the term qualified higher education expenses has the meaning given such term by section 72(t)(7). . (b) 403 (b) plans Paragraph (11) of section 403(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following: Under rules similar to the rules of section 401(k)(14)(C), a distribution shall be treated as made upon