Education for Life Act of 1998

Summary: Education for Life Act of 1998 - Amends the Internal Revenue Code to expand permitted withdrawals from education individual retirement accounts to include:  (1) qualified elementary and secondary education expenses (including home schooling expenses); and (2) qualified job training expenses.  Increases from:  (1) $500 to $2,500 the maximum amount which may annually be contributed to such an account; and (2) 18 to 55 the age until which contributions may be made to a beneficiary's account.  Permits a deduction (for both itemizers and nonitemizers) for such contributions.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Education for Life Act of 1998''.

SEC. 2. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS.

    (a) Withdrawals for Elementary and Secondary School Expenses and 
for Job Training Expenses by Older Individuals.--
            (1) In general.--Section 530(b)(2) of the Internal Revenue 
        Code of 1986 is amended to read as follows:
            ``(2) Qualified education expenses.--
                    ``(A) In general.--The term `qualified education 
                expenses' means--
                            ``(i) qualified elementary and secondary 
                        education expenses (as defined in paragraph 
                        (4)),
                            ``(ii) qualified higher education expenses 
                        (as defined in section 529(e)(3)), and
                            ``(iii) qualified job training expenses (as 
                        defined in paragraph (5)).
                Such expenses shall be reduced as provided in section 
                25A(g)(2).
                    ``(B) Qualified state tuition programs.--Such term 
                shall include amounts paid or incurred to purchase 
                tuition credits or certificates, or to make 
                contributions to an account, under a qualified State 
                tuition program (as defined in section 529(b)) for the 
                benefit of the beneficiary of the account.''.
            (2) Qualified elementary and secondary education expenses; 
        qualified job training expenses.--Section 530(b) of such Code 
        is amended by adding at the end the following new paragraphs:
            ``(4) Qualified elementary and secondary education 
        expenses.--
                    ``(A) In general.--The term `qualified elementary 
                and secondary education expenses' means tuition, fees, 
                tutoring, special needs services, books, supplies, 
                computer equipment (including related software and 
                services) and other equipment, transportation, and 
                supplementary expenses required for the enrollment or 
                attendance of the designated beneficiary of the trust 
                at a public, private, or religious school.
                    ``(B) Special rule for home- schooling.--Such term 
                shall include expenses described in subparagraph (A) 
                required for education provided for homeschooling if 
                the requirements of any applicable State or local law 
                are met with respect to such education.
                    ``(C) School.--The term `school' means any school 
                which provides elementary education or secondary 
                education (through grade 12), as determined under State 
                law.
            ``(5) Qualified job training expenses.--
                    ``(A) In general.--The term `qualified job training 
                expenses' means--
                            ``(i) tuition and fees required for the 
                        enrollment or attendance of a worker in an 
                        applicable training program,
                            ``(ii) fees, books, supplies, and equipment 
                        required for an applicable training program, 
                        and
                            ``(iii) a reasonable allowance for meals 
                        and lodging while attending an applicable 
                        training program.
                    ``(B) Applicable training program.--For purposes of 
                subparagraph (A), the term `applicable training 
                program' means--
                            ``(i) any applicable program (as defined in 
                        section 314(g) of the Job Training Partnership 
                        Act), and
                            ``(ii) any training program approved under 
                        section 236 of the Trade Act of 1974.''.
            (3) Contributions to account permitted until beneficiary 
        attains age 55.--Clause (ii) of section 530(b)(1)(A) of such 
        Code is amended by striking ``age 18'' and inserting ``age 
        55''.
            (4) Conforming amendments.--Subsections (b)(1) and (d)(2) 
        of section 530 of such Code are each amended by striking 
        ``higher'' each place it appears in the text and heading 
        thereof.
    (b) Increase in Maximum Contributions to Education Individual 
Retirement Accounts.--Subsections (b)(1)(A)(iii) and (d)(4)(C) of 
section 530, and section 4973(e)(1)(A), of such Code are each amended 
by striking ``$500'' and inserting ``$2,500''.
    (c) Deduction for Contributions to Education Individual Retirement 
Accounts.--
            (1) In general.--Part VII of subchapter B of chapter 1 of 
        such Code (relating to additional itemized deductions for 
        individuals) is amended by redesignating section 222 as section 
        223 and by inserting after section 221 the following new 
        section:

``SEC. 222. CONTRIBUTIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS.

    ``(a) Deduction Allowed.--In the case of an individual, there shall 
be allowed as a deduction the amount paid in cash for the taxable year 
by or on behalf of such individual to any education individual 
retirement account for the benefit of any individual.
    ``(b) Maximum Deduction.--The amount allowable as a deduction under 
subsection (a) shall not exceed $2,500 with respect to each individual 
for whose benefit the payments referred to in subsection (a) are made.
    ``(c) Other Limitations and Restrictions.--
            ``(1) Beneficiary must be under age 55.--No deduction shall 
        be allowed under this section for any payment for the benefit 
        of an individual if such individual has attained age 55 before 
        the date that the payment is made.
            ``(2) Recontributed amounts.--No deduction shall be allowed 
        under this section with respect to a rollover contribution.
            ``(3) Employer payments.--For purposes of this title, any 
        amount paid by an employer to an education individual 
        retirement plan shall be treated as payment of compensation to 
        the employee (other than a self-employed individual who is an 
        employee within the meaning of section 401(c)(1)) includible in 
        his gross income in the taxable year for which the amount was 
        contributed, whether or not a deduction for such payment is 
        allowable under this section to the employee.''.
            (2) Deduction allowed whether or not taxpayer itemizes 
        other deductions.--Subsection (a) of section 62 of such Code is 
        amended by inserting after paragraph (17) the following new 
        paragraph:
            ``(18) Contributions to education individual retirement 
        accounts.--The deduction allowed by section 222.''.
            (3) Clerical amendment.--The table of sections for part VII 
        of subchapter B of chapter 1 of such Code is amended by 
        striking the last item and inserting the following new items:

                              ``Sec. 222. Contributions to education 
                                        individual retirement accounts.
                              ``Sec. 223. Cross reference.''.
    (d) No Penalty for Distributions Not Used for Education Expenses 
After Date Beneficiary Attains Age 59\1/2\.--Subparagraph (B) of 
section 530(d)(4) of such Code (relating to additional tax for 
distributions not used for educational expenses) is amended by striking 
``or'' at the end of clause (ii), by striking the period at the end of 
clause (iii) and inserting ``, or'', and by adding at the end the 
following new clause:
                            ``(iv) made to the designated beneficiary 
                        on or after the date on which the designated 
                        beneficiary attains age 59\1/2\.''.
    (e) Waiver of Age Limitations for Children With Special Needs.--
Paragraph (1) of section 530(b) of such Code is amended by adding at 
the end the following flush sentence:
        ``The age limitations in the preceding sentence shall not apply 
        to any designated beneficiary with special needs (as determined 
        under regulations prescribed by the Secretary).''.
    (f) Corporations Permitted To Contribute to Accounts.--Paragraph 
(1) of section 530(c) of such Code is amended by striking ``The maximum 
amount which a contributor'' and inserting ``In the case of a 
contributor who is an individual, the maximum amount the contributor''.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.