```

[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1939 Introduced in House (IH)]

113th CONGRESS
  1st Session
                                H. R. 1939

  To amend the Workforce Investment Act of 1998 to establish lifelong 
          learning accounts programs, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 9, 2013

 Mr. Kilmer (for himself and Mr. Polis) introduced the following bill; 
which was referred to the Committee on Education and the Workforce, and 
  in addition to the Committee on Ways and Means, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL

 
  To amend the Workforce Investment Act of 1998 to establish lifelong 
          learning accounts programs, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Skills Investment Act of 2013''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Finding.--Congress finds the following:
            (1) It will not be possible for adult workers in the United 
        States to maintain a high standard of living in a competitive 
        global economy without a dramatic increase in their skills.
            (2) Workers need up-to-date skills and skill credentials to 
        keep pace with the changing and increasingly complex demands of 
        the 21st century economy.
            (3) The fastest-growing occupations and best-paying jobs 
        are those that require some postsecondary education. 
        Maintaining a competitive edge requires knowledge and other 
        skills. Increases in a country's overall level of educational 
        attainment lead to increases in its overall rate of economic 
        growth.
            (4) The high cost of education and skill development has 
        limited the options of many workers. Current major benefits 
        such as the use of a HOPE tax credit or a Coverdell education 
        savings account are not available to students who attend school 
        less than half-time. Other workers do not earn enough to 
        qualify for available education and training tax credits and 
        deductions. Most available financial aid is intended for full-
        time students studying for degrees rather than the many adults 
        who cannot attend education or skill development programs full-
        time because of demanding family and work commitments.
            (5) Employers increasingly need workers with 21st century 
        workplace and technical skills to stay competitive.
    (b) Purpose.--The purpose of this Act is to establish an innovative 
program to support lifelong learning, that--
            (1) motivates workers to participate in education and skill 
        development activities in which the workers would not otherwise 
        participate;
            (2) provides a financial incentive to workers to save for 
        education and skill development activities for their careers, 
        and better manage their careers by upgrading, at the time and 
        place of their choosing, their skills;
            (3) offers workers labor market and career information to 
        make informed choices when enhancing skills to prosper in 
        today's dynamic and highly competitive global economy; and
            (4) provides an incentive to small employers to invest in 
        and offer learning opportunities to improve their employees' 
        skills and productivity.

SEC. 3. LIFELONG LEARNING ACCOUNTS.

    (a) In General.--Subtitle B of title I of the Workforce Investment 
Act of 1998 (29 U.S.C. 2811 et seq.) is amended--
            (1) by redesignating chapter 6 as chapter 7; and
            (2) by inserting after chapter 5 the following:

                ``CHAPTER 6--LIFELONG LEARNING ACCOUNTS

``SEC. 135. DEFINITIONS.

    ``In this chapter:
            ``(1) Career pathway.--The term `career pathway' means a 
        series of connected education and training strategies and 
        support services that enable individuals to--
                    ``(A) secure industry relevant certification;
                    ``(B) obtain employment within an occupational area 
                and to advance to higher levels of future education and 
                employment in that area; and
                    ``(C) progress through one or more postsecondary 
                education or training options.
            ``(2) Career plan.--The term `career plan' means an 
        individual employment plan described in section 
        134(d)(3)(C)(ii) that--
                    ``(A) describes a worker's career goal, and steps 
                or alternative routes associated with acquiring the 
                skills and skill credentials needed to achieve the 
                goal; and
                    ``(B) includes labor market and career information 
                on local in-demand industries and high growth 
                industries.
            ``(3) Education or skill development.--The term `education 
        or skill development' means an activity provided--
                    ``(A) through a program or course of instruction by 
                a postsecondary educational institution described in 
                section 122(a)(2)(A);
                    ``(B) through a registered apprenticeship program; 
                or
                    ``(C) through a program or course of instruction 
                that provides training services, within the meaning of 
                section 134(d)(4).
            ``(4) Eligible education or skill development expense.--The 
        term `eligible education or skill development expense' means an 
        amount paid for a program or course of instruction (including a 
        registered apprenticeship program) of career-related education 
        or skill development, provided by an eligible provider, 
        including--
                    ``(A) tuition, fees, and similar payments;
                    ``(B) payments for books, supplies, equipment, 
                tools, and information technology devices, required for 
                such program or course; and
                    ``(C) any expenses related to an assessment of an 
                eligible worker's prior learning or competency used to 
                award credit for or placement in a program or course of 
                instruction.
            ``(5) Eligible provider.--The term `eligible provider' 
        means--
                    ``(A) a postsecondary educational institution 
                described in section 122(a)(2)(A) or a provider 
                described in section 122(a)(2)(B); or
                    ``(B) a provider identified as an eligible provider 
                of training services under section 122(e).
            ``(6) Eligible worker.--The term `eligible worker' means an 
        individual--
                    ``(A) who is age 16 or older;
                    ``(B) on whose behalf a lifelong learning account 
                is established; and
                    ``(C) who, on the date of application for the 
                establishment of the account, was employed, was self-
                employed, or had previously been employed and was 
                looking for work.
            ``(7) Institution of higher education.--The term 
        `institution of higher education' has the meaning given the 
        term in section 101(a) of the Higher Education Act of 1965 (20 
        U.S.C. 1001(a)).
            ``(8) Labor market and career information.--The term `labor 
        market and career information' means information about--
                    ``(A) a regional labor market and promising 
                industries and occupations for a worker in that market;
                    ``(B) skills and skill credentials needed by a 
                worker to achieve the worker's career goal; and
                    ``(C) skill and work experience assessment results 
                for the worker.
            ``(9) Lifelong learning account.--
                    ``(A) In general.--The term `lifelong learning 
                account' means an individual eligible worker's 
                federally tax exempt portable education savings 
                account, established as a trust--
                            ``(i) that contains contributions, which 
                        may be made by the worker, the worker's 
                        employer, or a third party, or which may be 
                        made by the worker and matched by the employer;
                            ``(ii) that is established for the purpose 
                        of paying for eligible education and skill 
                        development expenses, to bolster the worker's 
                        existing career or a transition to a new 
                        career; and
                            ``(iii) for which--
                                    ``(I) no contribution may be 
                                accepted unless the contribution is in 
                                cash;
                                    ``(II) except in the case of a 
                                rollover contribution, the total amount 
                                of contributions to the account, by the 
                                worker, the employer, or a third party, 
                                may not exceed $5,000 for a single 
                                taxable year;
                                    ``(III) no part of the trust assets 
                                may be invested in life insurance 
                                contracts;
                                    ``(IV) no part of the trust assets 
                                may be invested in any collectible (as 
                                defined in section 408(m) of the 
                                Internal Revenue Code of 1986);
                                    ``(V) the assets of the trust may 
                                not be commingled with other property 
                                except in a common trust fund or common 
                                investment fund;
                                    ``(VI) the interest of an 
                                individual in the balance in the 
                                individual's account shall be 
                                nonforfeitable; and
                                    ``(VII) no distribution shall be 
                                made from the account except for 
                                eligible education or skill development 
                                expenses or after an event described in 
                                section 135E(b)(4)(I).
                    ``(B) Adjustment for inflation.--The amount set 
                forth in subparagraph (A)(iii)(I) shall be adjusted in 
                accordance with increases in the Consumer Price Index 
                for all urban consumers of the Bureau of Labor 
                Statistics.
            ``(10) One-stop center.--The term `one-stop center' means a 
        one-stop center referred to in section 134(c).
            ``(11) Registered apprenticeship program.--The term 
        `registered apprenticeship program' means a program--
                    ``(A) with an industry skills training approach 
                that combines technical and theoretical training--
                            ``(i) through structured on-the-job 
                        learning with related instruction (in a 
                        classroom or through distance learning) while 
                        an individual is employed, working under the 
                        direction of qualified personnel or a mentor, 
                        and earning incremental wage increases aligned 
                        to enhanced job proficiency; and
                            ``(ii) resulting in the acquisition of 
                        nationally recognized and portable certificate, 
                        including a certificate of completion of 
                        apprenticeship; and
                    ``(B) carried out under a plan approved by the 
                Office of Apprenticeship or a State agency recognized 
                by the Department of Labor, and meeting the standards 
                required under sections 29 and 30 of title 29, Code of 
                Federal Regulations (or any corresponding similar 
                regulation or ruling), including such matters as the 
                requirement for a written apprenticeship agreement.
            ``(12) State agency.--The term `State agency' means an 
        agency appointed under section 135B(b)(1).
            ``(13) Trustee.--The term `trustee' means a Governor-
        designated entity, which may be a bank (as defined in section 
        408(n) of the Internal Revenue Code of 1986), that demonstrates 
        to the Governor that the entity will establish and manage a 
        lifelong learning account in a manner consistent with the 
        requirements of this chapter, which demonstration may be 
        accomplished by showing a record of success in establishing and 
        managing similar retirement or education savings accounts.
            ``(14) Worker.--The term `worker' means an individual--
                    ``(A) who is age 16 or older; and
                    ``(B) who is employed, is self-employed, or was 
                previously employed and is looking for work; or

``SEC. 135A. LIFELONG LEARNING ACCOUNT PROGRAMS.

    ``The Secretary shall make grants to States to pay for the Federal 
share of establishing lifelong learning account programs, to enhance 
and expand education and skill development activities for eligible 
workers.

``SEC. 135B. STATE SUPPLEMENTAL PLANS.

    ``(a) In General.--For a State to be eligible to receive a grant 
under this chapter, the Governor of the State shall submit a five-year 
plan to the Secretary at such time, in such manner, and containing such 
information as the Secretary may require.
    ``(b) Contents.--The plan shall consist of a supplement to the 
State plan described in section 112 and shall include, at a minimum--
            ``(1) information identifying a fiscal and administrative 
        agency that is a member of the State board appointed by the 
        Governor of the State to design, establish, and implement the 
        lifelong learning account program proposed for the State;
            ``(2)(A) an assurance that the Governor of the State will 
        designate, on the recommendation of the State Board, a trustee 
        to establish and manage the lifelong learning accounts of 
        eligible workers throughout the entire State; and
            ``(B) a description of any criteria, developed in 
        cooperation with State board, other than criteria issued under 
        this chapter, that the Governor will use to designate such a 
        trustee;
            ``(3) information describing the formula the State will use 
        to allocate funding equitably to local areas within the State 
        to provide assistance to one-stop centers, as described in 
        section 135C(a)(1)(C);
            ``(4) information describing how the State board will 
        oversee the design, establishment, and implementation of the 
        lifelong learning accounts program;
            ``(5) a description of the State requirements for the 
        program, including requirements to ensure that the trustee 
        manages the lifelong learning accounts in a manner consistent 
        with the fiscal control and accounting procedures described in 
        paragraph (11);
            ``(6) a schedule for implementation of the lifelong 
        learning account program, which (notwithstanding any other 
        provision of this chapter) may specify implementation in phases 
        if the schedule provides for full statewide implementation not 
        later than 2 years after the date of approval of the plan;
            ``(7)(A)(i) a description of the career information, 
        guidance, counseling, and related activities to be carried out 
        through the one-stop centers in the State, to enable workers 
        seeking to establish or use a lifelong learning account to make 
        informed decisions about meeting their education and skill 
        development needs, including labor market and career 
        information, career planning, and information on the high-
        skill, high-demand industries identified under subparagraph (B) 
        and related career pathways; and
            ``(ii) a description of information to be provided as 
        described in paragraphs (2), (3), and (4) of section 135E(a); 
        and
            ``(B) information, as reported in the State plan, 
        identifying high-skill, high-demand industries in each region 
        of the State or in the State, and sets of courses aligned with 
        the needs of those industries, and services, that constitute 
        career pathways;
            ``(8) a description of the methods the State agency will 
        use to determine and carry out State-level activities described 
        in section 135C(b) and any criteria established by the State 
        for State contributions under section 135C(a)(2);
            ``(9) a description of how the State agency will monitor 
        and assess the implementation (including operation) of the 
        lifelong learning account program, including a description of 
        the methods the State agency will use for collecting and 
        reporting data on the program as required by the Secretary and 
        providing technical assistance to the one-stop centers in the 
        State, to implement and continuously improve the implementation 
        of a fully operational lifelong learning account program;
            ``(10) information describing how the State will use the 
        funds the State receives under this chapter to leverage other 
        Federal, State, local, and private resources, to maximize the 
        effective use of those resources and maximize the effectiveness 
        of the lifelong learning account program, and to expand the 
        participation of workers (especially lower-income workers) and 
        employers (especially small and mid-sized employers) in the 
        program;
            ``(11) an assurance that the State agency will provide for 
        fiscal control and accounting procedures to ensure the proper 
        disbursing of and accounting for funds made available to the 
        State through the grant and for funds paid into lifelong 
        learning accounts;
            ``(12) a description of the process that the State used to 
        provide an opportunity for comment on, and input on the 
        development of, the State supplemental plan by the State board 
        and by the public, representatives of business, and 
        representatives of labor organizations;
            ``(13)(A) an assurance that the State agency will, at the 
        request of a eligible worker who has moved to a second State, 
        direct the trustee managing the worker's lifelong learning 
        account to transfer the account to a trustee in the second 
        State and will otherwise comply with the portability plan 
        described in subsection (e); and
            ``(B) a description of the means by which the State agency 
        will direct the transfers, and otherwise comply with the 
        portability plan, referred to in subparagraph (A);
            ``(14) if the State requires a minimum amount of 
        contributions described in section 135E(b)(2)(B), the minimum 
        amount;
            ``(15) an assurance that the State will participate in any 
        evaluation or research conducted under section 135H; and
            ``(16) an assurance that the State will use no more than 10 
        percent of the funds for administrative costs.
    ``(c) Request for Waiver.--At the election of a State, the State 
may include in the plan a request for a waiver of section 
135E(b)(4)(D), to permit a one-stop center staff or system operator of 
the statewide web-based system in the State to rely on an eligible 
worker's statement described in section 135E(b)(4)(C)(iv). The 
Secretary may approve the request as a portion of the plan, or may deny 
the request.
    ``(d) Supplemental Plan Submission and Approval.--A State 
supplemental plan submitted to the Secretary under this section by a 
Governor shall be considered to be approved by the Secretary at the end 
of the 90-day period beginning on the day the Secretary receives the 
plan, unless the Secretary makes a written determination, during the 
90-day period, that the plan is inconsistent with the provisions of 
this chapter.
    ``(e) Portability Plan.--The Secretary shall develop, in 
consultation with State agencies and other entities and individuals, a 
plan to ensure the portability of lifelong learning accounts among 
States. The plan shall address the extent of portability of lifelong 
learning accounts established for eligible workers. The Secretary shall 
ensure that States comply with the plan, in determining whether to 
approve State supplemental plans under this section.
    ``(f) Modifications to Plan.--A State may submit modifications to a 
State supplemental plan in accordance with the requirements of this 
section and section 135C(c) as necessary during the period covered by 
the plan.
    ``(g) Compliance With Plan Requirements.--A State shall comply with 
the requirements of the State supplemental plan to be eligible to 
receive funds under this chapter. Nothing in this chapter shall be 
construed to affect the eligibility of a State for an allotment under 
section 127 or 132, or financial assistance under the Wagner-Peyser Act 
(29 U.S.C. 49 et seq.), on the basis of the State's compliance with the 
requirements of the State supplemental plan.

``SEC. 135C. STATE ACTIVITIES.

    ``(a) In General.--A State that receives a grant under this 
chapter--
            ``(1) shall use the funds made available through the 
        grant--
                    ``(A) for the design, establishment, and 
                implementation (including monitoring and assessment) of 
                lifelong learning accounts programs, as described in 
                subsection (b);
                    ``(B) to provide funds to one or more trustees in 
                the State for the establishment and management of 
                lifelong learning accounts as described in section 
                135E(b); and
                    ``(C) to provide assistance to the one-stop centers 
                in the State, to enable the one-stop center staff to 
                carry out the responsibilities described in section 
                135E(a); and
            ``(2) may, after carrying out paragraph (1), use a portion 
        of the grant funds to make contributions to lifelong learning 
        accounts in the State that meet criteria established by the 
        State, such as accounts to which small- and mid-sized employers 
        have made contributions or accounts of lower-income eligible 
        workers.
    ``(b) State-Level Activities.--The State agency shall design, 
establish, and implement (including monitoring and assessing) the 
lifelong learning accounts program, including--
            ``(1) establishing and maintaining a worker-accessible 
        statewide web-based system to provide the assistance described 
        in paragraphs (1) through (4) of section 135E(a) and meet the 
        applicable requirements of section 135E(b);
            ``(2) developing outreach and marketing activities to be 
        carried out in the State;
            ``(3) reviewing the State list of training services 
        providers compiled under section 122(e)(4) to determine the 
        currency and accuracy of the list, updating the list, improving 
        the format of the list, and increasing access to the list;
            ``(4) providing capacity building and technical assistance 
        to local boards, one-stop center staff, (and employees of such 
        centers who provide career information, guidance, counseling, 
        and related activities), and eligible providers, with respect 
        to the authorities and responsibilities of such entities under 
        this chapter;
            ``(5) developing, disseminating, and presenting information 
        on the lifelong learning account program of the State to 
        workers, employers, and general public, and carrying out 
        creative efforts to engage private sector organizations (such 
        as labor organizations, industry organizations, and nonprofit 
        organizations) and public sector organizations as partners in 
        the program; and
            ``(6) preparing reports for the State board for the State, 
        containing assessments of the program.
    ``(c) State Board Responsibilities.--The State board for the State 
shall--
            ``(1) make recommendations to the Governor about the 
        designation of a trustee;
            ``(2) provide advice to the Governor and the State agency 
        on a general vision for a lifelong learning account program 
        that suggests ways to create opportunities for all workers, but 
        especially for workers earning less than 200 percent of the 
        poverty line or workers without a degree from a 2-year or 4-
        year nationally recognized postsecondary (or not participating 
        in an apprenticeship program), to successfully participate in 
        the program, with the goal of improving their skills and the 
        likelihood of long-term prosperity for themselves and their 
        families;
            ``(3) provide independent advice to the State agency about 
        the operation and performance of the lifelong learning account 
        program, and, as appropriate, enter into contracts for studies 
        or assessments of the program in order to provide that advice;
            ``(4) review and provide advice to the Governor on 
        proposals for State supplemental plans; and
            ``(5) receive and comment on reports from the trustee and 
        the State agency, containing assessments of the lifelong 
        learning account program, and from, as appropriate, the 
        Secretary and other entities evaluating or researching the 
        program.

``SEC. 135D. LOCAL SUPPLEMENTAL PLANS.

    ``(a) In General.--Each local board shall develop and submit to the 
Governor a local supplemental plan, in partnership with the appropriate 
chief elected official. The plan shall be consistent with the State 
supplemental plan.
    ``(b) Contents.--The plan shall consist of a supplement to the 
local plan described in section 118 and shall include, at a minimum--
            ``(1) the description referred to in section 135B(b)(7)(A), 
        with respect to information and activities to be provided 
        through the one-stop centers in the local area involved;
            ``(2) an assurance that the local one-stop delivery system 
        will, through the one-stop centers in the local area, provide 
        the assistance described in paragraphs (1) through (5) of 
        section 135E(a);
            ``(3) an assurance that the one-stop center staff for the 
        one-stop centers in the local area will coordinate activities 
        carried out through the centers with State-level activities, 
        including the operation of the statewide web-based system, to 
        provide the assistance described in paragraphs (1) through (4) 
        of section 135E(a);
            ``(4) information describing how the local board will use 
        the funds the local area receives under this chapter to 
        leverage other Federal, State, local, and private resources, to 
        maximize the effective use of those resources and maximize the 
        effectiveness of the lifelong learning account program in the 
        State, and to expand the participation of workers (especially 
        lower-income workers) and employers (especially small- and mid-
        sized employers) in the program; and
            ``(5) other assurances as required by the Governor.
    ``(c) Supplemental Plan Submission and Approval.--A local 
supplemental plan submitted to a Governor under this section by a local 
board and chief elected official shall be considered to be approved by 
the Governor at the end of the 90-day period beginning on the day the 
Governor receives the plan, unless the Governor makes a written 
determination, during the 90-day period, that--
            ``(1) deficiencies in activities carried out under this 
        chapter have been identified, and the local area has not made 
        acceptable progress in implementing corrective measures to 
        address the deficiencies; or
            ``(2) the plan is inconsistent with the provisions of this 
        chapter.

``SEC. 135E. LOCAL ACTIVITIES.

    ``(a) One-Stop Center Staff.--The one-stop center staff that 
receives assistance under section 135C(a)(1)(C) shall use the 
assistance to--
            ``(1) provide career information, guidance, counseling, and 
        related activities for workers seeking to establish or use a 
        lifelong learning account, including labor market and career 
        information, career planning, and information on the high-
        skill, high-demand industries, in the region involved, that are 
        identified under section 135B(b)(7)(B) and related career 
        pathways;
            ``(2) provide information on lifelong learning accounts, 
        and assistance in establishing and using lifelong learning 
        accounts, including applying to establish such an account;
            ``(3) provide information on eligible providers, their 
        education and skill development programs or courses, and the 
        eligible education or skill development expenses associated 
        with the programs or courses;
            ``(4) provide information about other public or private 
        education or skill development activities (other than 
        activities eligible for funding through a lifelong learning 
        account) that workers may be eligible to participate in to meet 
        their education and skill development needs;
            ``(5) carry out outreach and marketing activities; and
            ``(6) meet the applicable requirements of subsection (b).
    ``(b) Trustees.--A trustee shall establish and manage lifelong 
learning accounts in accordance with the following requirements:
            ``(1) Establishment.--
                    ``(A) Request.--A worker who resides in a State and 
                who meets the requirements of section 135(6) but does 
                not have a lifelong learning account may, at the 
                election of the worker, request a lifelong learning 
                account. The worker may submit the request through a 
                one-stop center (to the one-stop center staff) or 
                through the statewide web-based system (to the system 
                operator). The request shall include an assurance that 
                the employer of the worker has not required, coerced, 
                or influenced the worker to establish the account.
                    ``(B) Information.--On receipt of a request 
                described in subparagraph (A) for such a worker, the 
                one-stop center staff involved or the operator of the 
                web-based system shall supply information to the worker 
                on the manner in which the account will be managed, the 
                requirements for withdrawing and using funds from the 
                account, and information on the prohibition and 
                procedure described in paragraph (4)(H), and will ask 
                the worker to acknowledge receipt of the information.
                    ``(C) Establishment.--On receiving the 
                acknowledgment from the worker, the one-stop center 
                staff or system operator shall forward the application 
                to the appropriate trustee, who shall establish the 
                account.
            ``(2) Contributions.--
                    ``(A) In general.--A contribution may be made to an 
                eligible worker's lifelong learning account by--
                            ``(i) the worker;
                            ``(ii) the employer of the worker, who may 
                        provide contributions without regard to the 
                        worker's contributions, or as matching funds; 
                        or
                            ``(iii) a third party, such as the State, a 
                        political subdivision of the State, the Federal 
                        government through any Federal program; an 
                        individual, or a foundation.
                    ``(B) Minimum contribution for employer 
                contributions.--The State may require a worker to 
                provide a minimum amount of contributions to the 
                worker's lifelong learning account before permitting 
                the worker's employer to provide employer contributions 
                under this paragraph.
            ``(3) Transfers.--If the eligible worker moves to a second 
        State, at the request of the eligible worker, the State 
        described in paragraph (1) shall direct the trustee to transfer 
        the worker's lifelong learning account to the second State, in 
        compliance with the portability plan described in subsection 
        (d). The program requirements of the lifelong learning account 
        program in the second State shall apply to the account.
            ``(4) Withdrawal of amounts.--
                    ``(A) Application to one-stop center staff.--
                            ``(i) In general.--An eligible worker who 
                        desires to withdraw funds from the worker's 
                        lifelong learning account shall submit an 
                        application to withdraw the funds--
                                    ``(I) at a one-stop center, to the 
                                one-stop center staff; or
                                    ``(II) through the statewide web-
                                based system, to the system operator.
                            ``(ii) Assurance.--The application shall 
                        include assurances that--
                                    ``(I) the worker is not requesting 
                                funds for routine health and safety 
                                training or training that relates to 
                                use of new equipment that is otherwise 
                                covered by the employer;
                                    ``(II) the worker is not requesting 
                                funds for an education or skill 
                                development activity that was 
                                previously provided by the worker's 
                                employer or that is an activity for 
                                which the employer previously provided 
                                financial assistance (such as tuition 
                                assistance) to workers, if the employer 
                                initiates discontinuance of the 
                                activity or financial assistance, 
                                respectively, less than 6 months before 
                                the date of the request; and
                                    ``(III) the employer of the worker 
                                has not required, coerced, or 
                                influenced the worker to establish the 
                                account or to use, or refrain from 
                                using, funds from the account for any 
                                type of education or skill development 
                                activity for which the worker may use 
                                the funds under this chapter, or for an 
                                activity described in subclause (I) or 
                                (II).
                    ``(B) Services.--The one-stop center staff or 
                system operator shall offer career information, 
                guidance, counseling, and related activities described 
                in subsection (a)(1) to the eligible worker.
                    ``(C) Application to trustee.--On receiving or 
                declining the services described in subparagraph (B) 
                the eligible worker shall submit an application to the 
                one-stop center staff or system operator, for the 
                trustee, containing--
                            ``(i) a career goal (and, if developed, a 
                        career plan);
                            ``(ii) a description of the career-related 
                        education or skill development activity to be 
                        funded through the withdrawal;
                            ``(iii) the eligible provider who will 
                        provide the education or skill development 
                        activity; and
                            ``(iv) a statement of the eligible 
                        education or skill development expense 
                        associated with the activity.
                    ``(D) Verification.--Except in a State covered by a 
                waiver approved under section 135B(c), on receiving the 
                application, the one-stop center staff or system 
                operator shall endeavor to verify the amount of the 
                expense specified on the statement described in 
                subparagraph (C)(iv). If the one-stop center staff or 
                system operator is able to verify the amount (or is in 
                a State covered by such a waiver), and the application 
                contains the items described in clauses (i) through 
                (iv) of subparagraph (C), the one-stop center staff or 
                system operator shall forward the application to the 
                trustee.
                    ``(E) Approval.--The trustee shall approve the 
                application not later than 10 days after receipt, 
                unless--
                            ``(i) the application fails to contain an 
                        item described in clause (i) through (iv) of 
                        subparagraph (C); or
                            ``(ii) the amount in the eligible worker's 
                        account is less than the amount of the expense 
                        specified on the statement described in 
                        subparagraph (C)(iv).
                    ``(F) Disbursement.--On approving the application, 
                the trustee shall disburse the amount of the expense 
                specified on the statement to the eligible provider. In 
                the event that the amount of the expense includes an 
                amount for an item described in section 135(4)(B), and 
                that amount is not payable to the provider, the 
                provider may reimburse the worker for the amount of 
                that item.
                    ``(G) Failure to disburse.--If, not earlier than 10 
                days after the date on which the trustee has received 
                the application, the trustee has failed to approve or 
                disapprove the application, or has approved the 
                application but failed to make a disbursement as 
                provided in subparagraph (F), the eligible worker may 
                bring an action in a court of appropriate jurisdiction 
                to compel disbursement of the amount.
                    ``(H) Prohibition on employer requirements, 
                coercion, or influence.--
                            ``(i) In general.--No employer of the 
                        eligible worker, or contributor to the worker's 
                        lifelong learning account, may require, coerce, 
                        or influence a worker to establish the account, 
                        or to use, or refrain from using, funds from 
                        the account for any type of education or skill 
                        development activity for which the worker may 
                        use the funds under this chapter, or any 
                        activity described in subclause (I) or (II) of 
                        subparagraph (A)(ii).
                            ``(ii) Grievance or complaint.--An eligible 
                        worker alleging a violation of this 
                        subparagraph may file a grievance or complaint 
                        in accordance with section 181(c).
                    ``(I) Special disbursements.--For purposes of this 
                paragraph, any disbursement (or request for 
                disbursement) made after the account beneficiary dies, 
                becomes disabled (within the meaning of section 
                72(m)(7) of the Internal Revenue Code of 1986), or has 
                attained age 70, shall be treated as a disbursement (or 
                request for disbursement) for eligible education or 
                skill development expenses.
            ``(5) Treatment of account.--
                    ``(A) Separation or divorce.--If a separation or 
                divorce agreement awards the lifelong learning account, 
                or the benefits of the account, of an eligible worker 
                to the worker's spouse or former spouse, the trustee 
                shall transfer the account to the spouse or former 
                spouse.
                    ``(B) Death.--On the death of an eligible worker--
                            ``(i) if the designated beneficiary for the 
                        lifelong learning account elects the 
                        application of this clause, such designated 
                        beneficiary shall be treated as the account 
                        beneficiary for purposes of such account; or
                            ``(ii) in any case not described in clause 
                        (i), the trustee shall pay the funds in the 
                        account to the beneficiary, and close the 
                        account.
    ``(c) Oversight.--Consistent with its responsibilities to oversee 
the one-stop delivery system in the local area, the local board shall 
oversee the implementation of the lifelong learning account program in 
the local area, and shall monitor and assess the performance of the 
program.

``SEC. 135F. FEDERAL SHARE.

    ``(a) In General.--The Federal share of the cost described in 
section 135A for administering the lifelong learning accounts program 
established by this chapter shall be 80 percent.
    ``(b) Non-Federal Share.--The State may provide the non-Federal 
share of the cost in cash or in-kind, fairly evaluated, including 
plant, equipment, or services. The State may provide the non-Federal 
share from State, local, or private sources.

``SEC. 135G. TRUSTEE REPORTS.

    ``(a) Preparation.--Each State that carries out a lifelong learning 
account program under this chapter shall require each trustee in the 
State to annually prepare a report containing information on 
contributions to and withdrawals from such accounts in the State, an 
assessment of the State lifelong learning account program, and 
information on such additional matters as the Secretary of Labor, after 
consultation with the Secretary of the Treasury, may require.
    ``(b) Submission.--The trustee shall submit each such report to the 
Governor and the State legislature of the State. The Governor shall 
transmit each such report to the Secretary of Labor, the Secretary of 
the Treasury, and Congress, and shall make the report available to the 
general public.

``SEC. 135H. EVALUATIONS AND OTHER RESEARCH.

    ``(a) In General.--The Secretary shall conduct evaluations and 
other research, directly or through grants or contracts, to determine 
the effectiveness of the lifelong learning account programs carried out 
under this chapter in meeting the objectives of this chapter.
    ``(b) Methodology and Research Designs.--The Secretary shall use 
appropriate methodology and research designs for the evaluations and 
research.
    ``(c) Topics.--In conducting the evaluations and research, the 
Secretary may address topics including whether the programs increased 
the wages or salaries of workers, resulted in promotions, new 
positions, or better positions for the workers, increased the number of 
workers who acquired industry-recognized skill credentials, enhanced 
the job performance of workers, or increased worker retention.
    ``(d) Report.--The Secretary shall submit to Congress a report 
containing the results of each evaluation or research project conducted 
under this section.

``SEC. 135I. STUDY ON CONTRIBUTIONS FROM FEDERAL PROGRAMS.

    ``(a) Study.--The Secretary, in conjunction with the Secretary of 
Health and Human Services, shall conduct a study concerning whether, 
and the degree to which, States should be permitted to use funds 
available under a covered program to make contributions to lifelong 
learning accounts of eligible workers in the State, and concerning the 
impacts on the covered program.
    ``(b) Report.--Not later than 24 months after the date of enactment 
of the Skills Investments Act of 2013, the Secretary of Labor shall 
submit to Congress a report containing the results of the study and any 
recommendations for legislation the Secretary determines to be 
appropriate.
    ``(c) Definition.--In this section, the term `covered program' 
means the program of block grants to States for temporary assistance 
for needy families established under part A of title IV of the Social 
Security Act (42 U.S.C. 601 et seq.), an employment and training 
program carried out under section 6(d)(4) of the Food Stamp Act of 1977 
(7 U.S.C. 2015(d)(4)), the portion of a program of employment and 
training activities carried out under chapter 5 that is funded through 
individual training accounts described in section 134(d)(4)(G), the 
activities (including training, other employment services, and 
provision of allowances) carried out under part II of subchapter B of 
chapter 2 of title II of the Trade Act of 1974 (29 U.S.C. 2295 et 
seq.), and another Federal employment and training program identified 
by the Secretary.

``SEC. 135J. ELIGIBILITY FOR OTHER FEDERAL BENEFITS.

    ``No Federal agency may take into consideration the amount 
deposited to, or withdrawn from, an eligible worker's lifelong learning 
account in determining the eligibility of the worker for any benefit or 
service under any provision of Federal law, including any education or 
skill development benefit or service, other than this chapter.''.
    (b) Conforming Amendment.--The table of contents in section 1(b) of 
the Workforce Investment Act of 1998 is amended--
            (1) by redesignating the item relating to the chapter 
        heading of chapter 6, as the item relating to the chapter 
        heading of chapter 7, of subtitle B of title I; and
            (2) by inserting after the items relating to chapter 5 of 
        that subtitle the following:

                ``Chapter 6--Lifelong Learning Accounts

``Sec. 135. Definitions.
``Sec. 135A. Lifelong learning account programs.
``Sec. 135B. State supplemental plans.
``Sec. 135C. State activities.
``Sec. 135D. Local supplemental plans.
``Sec. 135E. Local activities.
``Sec. 135F. Federal share.
``Sec. 135G. Trustee reports.
``Sec. 135H. Evaluations and other research.
``Sec. 135I. Study on contributions from Federal programs.
``Sec. 135J. Eligibility for other Federal benefits.''.

SEC. 4. AUTHORIZATION OF APPROPRIATIONS.

    Section 137 of the Workforce Investment Act of 1998 (29 U.S.C. 
2872) is amended by adding at the end the following:
    ``(d) Lifelong Learning Account Programs.--There is authorized to 
be appropriated to carry out chapter 6 such sums as may be necessary 
for each of fiscal years 2015 through 2020.''.

SEC. 5. CREDIT FOR CONTRIBUTIONS TO LIFELONG LEARNING ACCOUNTS.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by inserting after section 36B the following new section:

``SEC. 36C. CONTRIBUTIONS TO LIFELONG LEARNING ACCOUNTS.

    ``(a) Credit Allowed.--In the case of an eligible individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the applicable percentage of 
the contributions (other than rollover contributions described in 
subsection (e)(5)) paid in cash during such taxable year by or on 
behalf of such individual to a lifelong learning account of such 
individual.
    ``(b) Limitations and Definitions Related to Allowance of Credit.--
            ``(1) Dollar limitation.--The amount of contributions taken 
        into account under subsection (a) with respect to any eligible 
        individual for any taxable year shall not exceed the lesser 
        of--
                    ``(A) $3,000, or
                    ``(B) an amount equal to the compensation (as 
                defined in section 219(f)(1)) includible in the 
                individual's gross income for such taxable year.
            ``(2) Limitations based on modified adjusted gross 
        income.--
                    ``(A) Phaseout of dollar limitation based on 
                account beneficiary's modified adjusted gross income.--
                The $3,000 amount contained in paragraph (1)(A) shall 
                be reduced (but not below zero) by the account 
                beneficiary's reduction amount.
                    ``(B) Per contributor limitation based on 
                contributor's modified adjusted gross income.--In the 
                case of a contributor who is an individual (other than 
                an employer of the account beneficiary), the aggregate 
                amount of the contributions of such contributor which 
                may be taken into account under subsection (a) with 
                respect to any eligible individual for any taxable year 
                shall not exceed the excess (if any) of $3,000 over 
                such contributor's reduction amount.
                    ``(C) Account beneficiary's reduction amount.--For 
                purposes of subparagraph (A), the account beneficiary's 
                reduction amount is the amount which bears the same 
                ratio to $3,000 as--
                            ``(i) the excess of--
                                    ``(I) the account beneficiary's 
                                modified adjusted gross income for such 
                                taxable year, over
                                    ``(II) $100,000 (twice such amount 
                                in the case of a joint return), bears 
                                to
                            ``(ii) $20,000 (twice such amount in the 
                        case of a joint return).
                For purposes of the preceding sentence, the term 
                `modified adjusted gross income' means adjusted gross 
                income increased by any amount excluded from gross 
                income under section 911, 931, or 933.
                    ``(D) Contributor's reduction amount.--For purposes 
                of subparagraph (B), the contributor's reduction amount 
                is the amount that would be determined under 
                subparagraph (C) if `contributor' were substituted for 
                `account beneficiary' each place it appears therein.
                    ``(E) Special rule for married individuals filing a 
                separate return.--In the case of a married individual 
                filing a separate return, subparagraph (C)(I)(II) shall 
                be applied by substituting `zero' for the dollar amount 
                therein.
            ``(3) Treatment of employer contributions.--
                    ``(A) Exclusion from gross income.--Gross income 
                shall not include any contribution to a lifelong 
                learning account made by an employer of the account 
                beneficiary to the extent that the aggregate amount of 
                such contributions made during the taxable year does 
                not exceed the limitation in effect under paragraph (1) 
                (determined without regard to subparagraph (B) of this 
                paragraph) for such taxable year with respect to such 
                beneficiary.
                    ``(B) Coordination with credit.--The limitation 
                which would (but for this subparagraph) apply under 
                paragraph (1) with respect to the eligible individual 
                for any taxable year shall be reduced (but not below 
                zero) by the aggregate amount contributed to lifelong 
                learning accounts of such individual which is 
                excludable from the taxpayer's gross income for such 
                taxable year under subparagraph (A) (and such amount 
                shall not be taken into account in determining the 
                credit under subsection (a)).
            ``(4) Applicable percentage.--For purposes of this section, 
        the term `applicable percentage' means--
                    ``(A) 50 percent with respect to the first $500 of 
                contributions taken into account under subsection (a) 
                with respect to any eligible individual for any taxable 
                year, and
                    ``(B) 25 percent with respect to so much of such 
                contributions as exceeds $500.
            ``(5) Eligible individual.--For purposes of this section, 
        the term `eligible individual' means any individual for any 
        taxable year if, as of the first day of such taxable year, such 
        individual has attained age 16.
    ``(c) Lifelong Learning Accounts.--For purposes of this section--
            ``(1) In general.--The term `lifelong learning account' 
        means a trust created or organized in the United States as a 
        lifelong learning account under a lifelong learning account 
        program established by a State under chapter 6 of subtitle B of 
        title I of the Workforce Investment Act of 1998 exclusively for 
        the purpose of paying the eligible education or skill 
        development expenses of the account beneficiary and maintained 
        by a trustee consist with the requirements of section 135E(b) 
        of such Act, but only if the written governing instrument 
        creating the trust meets the following requirements:
                    ``(A) No contribution will be accepted unless it is 
                in cash.
                    ``(B) Except in the case of a rollover contribution 
                described in subsection (e)(5), no contribution will be 
                accepted if such contribution, when added to all 
                previous contributions to the trust for the calendar 
                year, would exceed $5,000.
                    ``(C) The trust assets will be held by a trustee 
                who will administer the trust consistent with the 
                requirements of such lifelong learning account program 
                and this section.
                    ``(D) No part of the trust assets will be invested 
                in life insurance contracts.
                    ``(E) No part of the trust assets will be invested 
                in any collectible (as defined in section 408(m)).
                    ``(F) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    ``(G) The interest of an individual in the balance 
                in his account is nonforfeitable.
                    ``(H) No distribution shall be made from the 
                account except--
                            ``(i) for eligible education or skill 
                        development expenses, or
                            ``(ii) after an event described in 
                        subsection (e)(2)(B).
            ``(2) Eligible education or skill development expense.--The 
        term `eligible education or skill development expense' means 
        any eligible education or skill development expense (as defined 
        in section 135 of the Workforce Investment Act of 1998) which 
        meets the requirements of subclauses (I) and (II) of section 
        135E(b)(4)(A)(ii) of such Act.
            ``(3) Account beneficiary.--The term `account beneficiary' 
        means the individual on whose behalf the lifelong learning 
        account was established.
            ``(4) Trustee.--The term `trustee' has the meaning given 
        the term in section 135 of the Workforce Investment Act of 
        1998.
            ``(5) Certain rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this section:
                    ``(A) Section 219(f)(3) (relating to time when 
                contributions deemed made).
                    ``(B) Section 408(g) (relating to community 
                property laws).
                    ``(C) Section 408(h) (relating to custodial 
                accounts).
    ``(d) Tax Treatment of Accounts.--
            ``(1) In general.--A lifelong learning account is exempt 
        from taxation under this subtitle unless such account has 
        ceased to be a lifelong learning account. Notwithstanding the 
        preceding sentence, any such account is subject to the taxes 
        imposed by section 511 (relating to imposition of tax on 
        unrelated business income of charitable, etc. organizations).
            ``(2) Nonqualified distribution treated as account 
        termination.--If there is a nonqualified distribution (as 
        defined in subsection (e)) from a lifelong learning account for 
        any taxable year--
                    ``(A) such account shall cease to be treated as a 
                lifelong learning account as of the close of such 
                taxable year, and
                    ``(B) any amounts in such account as of the close 
                of such taxable year shall be treated as distributed to 
                the account beneficiary on the last day of such taxable 
                year and shall be treated as not used to pay eligible 
                education or skill development expenses.
            ``(3) Application of other rules treating certain events as 
        account terminations.--Rules similar to the rules of paragraphs 
        (2) and (4) of section 408(e) shall apply to lifelong learning 
        accounts, and any amount treated as distributed under such 
        rules shall be treated as not used to pay eligible education or 
        skill development expenses.
    ``(e) Inclusion of Distributions in Gross Income.--
            ``(1) Inclusion in gross income.--Any amount distributed 
        out of a lifelong learning account shall be included in gross 
        income by the account beneficiary.
            ``(2) Additional tax.--
                    ``(A) In general.--Except as otherwise provided in 
                this subsection, the tax imposed by this chapter on the 
                account beneficiary for any taxable year in which there 
                is a nonqualified distribution from a lifelong learning 
                account shall be increased by 10 percent of the amount 
                of such distribution.
                    ``(B) Exceptions.--Subparagraph (A) and subsection 
                (d)(2) shall not apply if the distribution is made 
                after the account beneficiary dies, becomes disabled 
                (within the meaning of section 72(m)(7)), or has 
                attained age 70.
            ``(3) Nonqualified distribution.--For purposes of this 
        section, the term `nonqualified distribution' means the excess 
        (if any) of--
                    ``(A) the aggregate distributions from the account 
                during the taxable year, over
                    ``(B) the eligible education or skill development 
                expenses of the account beneficiary for the taxable 
                year.
            ``(4) Excess contributions returned before due date of 
        return.--
                    ``(A) In general.--If any excess contribution is 
                contributed for a taxable year to any lifelong learning 
                account of an individual, paragraphs (1) and (2) and 
                subsection (d)(2) shall not apply to distributions from 
                the lifelong learning accounts of such individual (to 
                the extent such distributions do not exceed the 
                aggregate excess contributions to all such accounts of 
                such individual for such year) if--
                            ``(i) such distribution is received by the 
                        individual on or before the last day prescribed 
                        by law (including extensions of time) for 
                        filing such individual's return for such 
                        taxable year, and
                            ``(ii) such distribution is accompanied by 
                        the amount of net income attributable to such 
                        excess contribution.
                Any net income described in clause (ii) shall be 
                included in the gross income of the individual for the 
                taxable year in which it is received.
                    ``(B) Excess contribution.--For purposes of 
                subparagraph (A), the term `excess contribution' means 
                any contribution (other than a rollover contribution 
                described in paragraph (6)) which is not taken into 
                account for purposes of determining the credit allowed 
                under subsection (a) or the amount excludable from the 
                taxpayer's gross income under subsection (b)(3).
            ``(5) Rollover contribution.--An amount is described in 
        this paragraph as a rollover contribution if it meets the 
        requirements of subparagraphs (A) and (B).
                    ``(A) In general.--Paragraphs (1) and (2) and 
                subsection (d)(2) shall not apply to any amount paid or 
                distributed from a lifelong learning account to the 
                account beneficiary to the extent the amount received 
                is paid into a lifelong learning account for the 
                benefit of such beneficiary not later than the 60th day 
                after the day on which the beneficiary receives the 
                payment or distribution.
                    ``(B) Limitation.--This paragraph shall not apply 
                to any amount described in subparagraph (A) received by 
                an individual from a lifelong learning account if, at 
                any time during the 1-year period ending on the day of 
                such receipt, such individual received any other amount 
                described in subparagraph (A) from a lifelong learning 
                account to which paragraphs (1) and (2) did not apply 
                by reason of the application of this paragraph.
            ``(6) Transfer of account incident to divorce.--The 
        transfer of an individual's interest in a lifelong learning 
        account to an individual's spouse or former spouse under a 
        divorce or separation instrument described in subparagraph (A) 
        of section 71(b)(2) shall not be considered a taxable transfer 
        made by such individual notwithstanding any other provision of 
        this subtitle, and such interest shall, after such transfer, be 
        treated as a lifelong learning account with respect to which 
        such spouse is the account beneficiary.
            ``(7) Treatment after death of account beneficiary.--
                    ``(A) Treatment if designated beneficiary is spouse 
                or elects to continue account.--If any individual 
                acquires the account beneficiary's interest in a 
                lifelong learning account by reason of being the 
                designated beneficiary of such account at the death of 
                the account beneficiary and such individual elects the 
                application of this subparagraph, such lifelong 
                learning account shall be treated as if such designated 
                beneficiary were the account beneficiary.
                    ``(B) Other cases.--
                            ``(i) In general.--If, by reason of the 
                        death of the account beneficiary, any person 
                        acquires the account beneficiary's interest in 
                        a lifelong learning account in a case to which 
                        subparagraph (A) does not apply--
                                    ``(I) such account shall cease to 
                                be a lifelong learning account as of 
                                the date of death, and
                                    ``(II) an amount equal to the fair 
                                market value of the assets in such 
                                account on such date shall be 
                                includible if such person is not the 
                                estate of such beneficiary, in such 
                                person's gross income for the taxable 
                                year which includes such date, or if 
                                such person is the estate of such 
                                beneficiary, in such beneficiary's 
                                gross income for the last taxable year 
                                of such beneficiary.
                            ``(ii) Deduction for estate taxes.--An 
                        appropriate deduction shall be allowed under 
                        section 691(c) to any person (other than the 
                        decedent or the decedent's spouse) with respect 
                        to amounts included in gross income under 
                        clause (I) by such person.
    ``(f) Reports.--The trustee of a lifelong learning account shall 
make such reports regarding such account to the Secretary and to the 
account beneficiary with respect to contributions, distributions, and 
such other matters as the Secretary may require under regulations. The 
reports required by this subsection shall be filed at such time and in 
such manner and furnished to such individuals at such time and in such 
manner as may be required by those regulations.''.
    (b) Tax on Excess Contributions.--Section 4973 of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``or'' at the end of subsection (a)(4), by 
        inserting ``or'' at the end of subsection (a)(5), and by 
        inserting after subsection (a)(5) the following new paragraph:
            ``(6) a lifelong learning account (within the meaning of 
        section 36C(c)),'', and
            (2) by adding at the end the following new subsection:
    ``(h) Excess Contributions to Lifelong Learning Accounts.--For 
purposes of this section, in the case of lifelong learning accounts 
(within the meaning of section 36C(c)), the term `excess contributions' 
means the sum of--
            ``(1) the aggregate amount contributed for the taxable year 
        to the accounts (other than rollover contributions described in 
        section 36C(e)(5)) which is not taken into account for purposes 
        of determining the credit allowed under section 36C(a) or the 
        amount excludable from the taxpayer's gross income under 
        section 36C(b)(3), and
            ``(2) the amount determined under this subsection for the 
        preceding taxable year, reduced by the sum of--
                    ``(A) the distributions out of the accounts with 
                respect to which additional tax was imposed under 
                section 36C(e)(2)(A) for the taxable year, and
                    ``(B) the excess (if any) of--
                            ``(i) the maximum amount of contributions 
                        which may be taken into account under section 
                        36C(a) for the taxable year, over
                            ``(ii) the amount contributed to the 
                        accounts for the taxable year.
                For purposes of this subsection, any contribution which 
                is distributed out of the lifelong learning account in 
                a distribution to which section 36C(e)(5) applies shall 
                be treated as an amount not contributed.''.
    (c) Tax on Prohibited Transactions.--
            (1) Paragraph (1) of section 4975(e) of the Internal 
        Revenue Code of 1986 (relating to prohibited transactions) is 
        amended by redesignating subparagraph (G) as subparagraph (H), 
        by striking ``or'' at the end of subparagraph (F), and by 
        inserting after subparagraph (F) the following new 
        subparagraph:
                    ``(G) a lifelong learning account described in 
                section 36C(c), or''.
            (2) Subsection (c) of section 4975 of such Code is amended 
        by adding at the end the following new paragraph:
            ``(7) Special rule for lifelong learning accounts.--An 
        individual for whose benefit a lifelong learning account is 
        established shall be exempt from the tax imposed by this 
        section with respect to any transaction concerning such account 
        (which would otherwise be taxable under this section) if, with 
        respect to such transaction, the account ceases to be a 
        lifelong learning account by reason of the application of 
        paragraph (2) or (3) of section 36C(d) to such account.''.
    (d) Failure To Provide Reports on Lifelong Learning Accounts.--
Paragraph (2) of section 6693(a) of the Internal Revenue Code of 1986 
is amended by striking ``and'' at the end of subparagraph (D), by 
redesignating subparagraph (E) as subparagraph (F), and by inserting 
after subparagraph (D) the following new subparagraph:
                    ``(E) section 36C(f) (relating to lifelong learning 
                accounts), and''.
    (e)  Exclusion From Employment Taxes.--
            (1) Federal insurance contributions act.--Subsection (a) of 
        section 3121 of the Internal Revenue Code of 1986 is amended by 
        striking ``or'' at the end of paragraph (22), by striking the 
        period at the end of paragraph (23) and inserting ``; or'', and 
        by inserting after paragraph (23) the following new paragraph:
            ``(24) any payment made to or for the benefit of an 
        employee if at the time of such payment it is reasonable to 
        believe that the employee will be able to exclude such payment 
        from income under section 36C(b)(3).''.
            (2) Railroad retirement tax.--Subsection (e) of section 
        3231 of such Code is amended by adding at the end the following 
        new paragraph:
            ``(13) Learning account contributions.--The term 
        `compensation' shall not include any payment made to or for the 
        benefit of an employee if at the time of such payment it is 
        reasonable to believe that the employee will be able to exclude 
        such payment from income under section 36C(b)(3).''.
            (3) Unemployment tax.--Subsection (b) of section 3306 of 
        such Code is amended by striking ``or'' at the end of paragraph 
        (19), by striking the period at the end of paragraph (20) and 
        inserting ``; or'', and by inserting after paragraph (20) the 
        following new paragraph:
            ``(21) any payment made to or for the benefit of an 
        employee if at the time of such payment it is reasonable to 
        believe that the employee will be able to exclude such payment 
        from income under section 36C(b)(3).''.
            (4) Withholding tax.--Subsection (a) of section 3401 of 
        such Code is amended by striking ``or'' at the end of paragraph 
        (22), by striking the period at the end of paragraph (23) and 
        inserting ``; or'', and by inserting after paragraph (23) the 
        following new paragraph:
            ``(24) any payment made to or for the benefit of an 
        employee if at the time of such payment it is reasonable to 
        believe that the employee will be able to exclude such payment 
        from income under section 36C(b)(3).''.
            (5) Social security trust funds held harmless.--There is 
        hereby appropriated (out of any money in the Treasury not 
        otherwise appropriated) for each fiscal year to each fund under 
        the Social Security Act an amount equal to the reduction in the 
        transfers to such fund for such fiscal year by reason of the 
        amendment made by paragraph (1).
    (f) Exemption From ERISA Requirements.--Subsection (b) of section 4 
of the Employee Retirement Income Security Act of 1974 is amended by 
striking ``or'' at the end of paragraph (4), by striking the period at 
the end of paragraph (5) and inserting ``; or'', and by inserting after 
paragraph (5) the following new paragraph:
            ``(6) such plan is maintained solely for the purposes of 
        establishing, and making contributions to, lifelong learning 
        accounts (within the meaning of section 36C(c) of the Internal 
        Revenue Code of 1986) on behalf of employees.''.
    (g) Conforming Amendments.--
            (1) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after the item relating to section 36B 
        the following new item:

``Sec. 36C. Contributions to lifelong learning accounts.''.
            (2) Section 6211(b)(4)(A) of such Code is amended by 
        inserting ``36C,'' after ``36B,''.
            (3) Section 1324(b)(2) of title 31, United States Code, is 
        amended by inserting ``36C,'' after ``36B,''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2013.

SEC. 6. CREDIT FOR SMALL BUSINESSES WITH RESPECT TO LIFELONG LEARNING 
              ACCOUNT PROGRAMS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45S. LIFELONG LEARNING ACCOUNTS CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible employer, the lifelong learning accounts credit is the sum 
of--
            ``(1) the lifelong learning account contributions credit, 
        and
            ``(2) the lifelong learning account administrative costs 
        credit.
    ``(b) Lifelong Learning Account Contributions Credit.--
            ``(1) In general.--For purposes of this section, the term 
        `lifelong learning account contributions credit' means the 
        amount equal to 25 percent of the aggregate amount paid or 
        incurred by the taxpayer during the taxable year as 
        contributions to lifelong learning accounts (within the meaning 
        of section 36C(c)) of employees of the taxpayer.
            ``(2) Dollar limitation.--The amount of the contributions 
        taken into account under paragraph (1) with respect to any 
        employee for any taxable year shall not exceed $3,000.
    ``(c) Lifelong Learning Account Administrative Costs Credit.--
            ``(1) In general.--For purposes of this section, the term 
        `lifelong learning account administrative costs credit' means 
        the amount equal to 50 percent of the aggregate amount paid or 
        incurred by the taxpayer during the taxable year as 
        administrative expenses in carrying out a program to make 
        payments to the lifelong learning accounts (within the meaning 
        of section 36C(c)) of employees of the taxpayer.
            ``(2) Dollar limitation.--The amount of the credit 
        determined under this subsection for any taxable year shall not 
        exceed--
                    ``(A) $500 per eligible employer for the first 
                credit year and each of the 2 taxable years immediately 
                following the first credit year, and
                    ``(B) zero for any other taxable year.
            ``(3) First credit year.--For purposes of this subsection, 
        the term `first credit year' means the first taxable year for 
        which the taxpayer claims a credit under this section.
            ``(4) Special rules.--For purposes of this subsection, 
        rules similar to the rules of paragraphs (1), (2), and (3) of 
        section 45E(e) shall apply.
    ``(d) Eligible Employer.--For purposes of this section, the term 
`eligible employer' has the meaning given such term by section 
408(p)(2)(C)(I) applied--
            ``(1) by substituting `250 employees' for `100 employees' 
        in subclause (I) thereof,
            ``(2) for purposes of determining eligibility for the 
        lifelong learning account contributions credit for any taxable 
        year, without regard to subclause (II) thereof, and
            ``(3) for purposes of determining eligibility for the 
        lifelong learning account administrative costs credit for any 
        taxable year, by treating the plan described in subsection 
        (c)(1) as the plan referred to in such subclause (II).
    ``(e) Recapture in Case of Employee Coercion, etc.--If the 
Secretary, after consultation with the Secretary of Labor, determines 
that the taxpayer has required, coerced, or influenced an employee to 
establish a life long learning account or to use, or refrain from 
using, funds from the account for any eligible education or skill 
development expense (as defined in section 36C)--
            ``(1) the tax imposed on the taxpayer under this subtitle 
        for the taxable year which includes the date of such 
        determination shall be increased by the amount of the credits 
        allowed under this section to the taxpayer for all taxable 
        years which include any portion of the period during which such 
        requirement, coercion, or influence occurred, and
            ``(2) no credit shall be allowed to the taxpayer under this 
        section for the taxable year which includes the date of such 
        determination and the succeeding taxable year.''.
    (b) Credit Part of General Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 is amended by striking ``plus'' at the 
end of paragraph (35), by striking the period at the end of paragraph 
(36) and inserting ``, plus'', and by adding at the end the following 
new paragraph:
            ``(37) the lifelong learning accounts credit determined 
        under section 45S.''.
    (c) Deduction for Unused Credit.--Section 196(c) of the Internal 
Revenue Code of 1986 is amended by striking ``and'' at the end of 
paragraph (13), by striking the period at the end of paragraph (14) and 
inserting ``, and'', and by adding at the end the following new 
paragraph:
            ``(15) the lifelong learning accounts credit determined 
        under section 45S.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new item:

``Sec. 45S. Lifelong learning accounts credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2013.
                                 <all>
```