I 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Skills Investment Act 

5 of 2013’’. 

6 SEC. 2. FINDINGS AND PURPOSE. 

7 (a) FINDING.—Congress finds the following: 

8 (1) It will not be possible for adult workers in 

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1 ing in a competitive global economy without a dra2 matic increase in their skills. 

3 (2) Workers need up-to-date skills and skill cre4 dentials to keep pace with the changing and increas5 ingly complex demands of the 21st century economy. 

6 (3) The fastest-growing occupations and best7 paying jobs are those that require some postsec8 ondary education. Maintaining a competitive edge 

9 requires knowledge and other skills. Increases in a 

10 country’s overall level of educational attainment lead 

11 to increases in its overall rate of economic growth. 

12 (4) The high cost of education and skill devel13 opment has limited the options of many workers. 

14 Current major benefits such as the use of a HOPE 

15 tax credit or a Coverdell education savings account 

16 are not available to students who attend school less 

17 than half-time. Other workers do not earn enough to 

18 qualify for available education and training tax cred19 its and deductions. Most available financial aid is in20 tended for full-time students studying for degrees 

21 rather than the many adults who cannot attend edu22 cation or skill development programs full-time be23 cause of demanding family and work commitments. 


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1 (5) Employers increasingly need workers with 

2 21st century workplace and technical skills to stay 

3 competitive. 

4 (b) PURPOSE.—The purpose of this Act is to estab5 lish an innovative program to support lifelong learning, 

6 that— 

7 (1) motivates workers to participate in edu8 cation and skill development activities in which the 

9 workers would not otherwise participate; 

10 (2) provides a financial incentive to workers to 

11 save for education and skill development activities 

12 for their careers, and better manage their careers by 

13 upgrading, at the time and place of their choosing, 

14 their skills; 

15 (3) offers workers labor market and career in16 formation to make informed choices when enhancing 

17 skills to prosper in today’s dynamic and highly com18 petitive global economy; and 

19 (4) provides an incentive to small employers to 

20 invest in and offer learning opportunities to improve 

21 their employees’ skills and productivity. 

22 SEC. 3. LIFELONG LEARNING ACCOUNTS. 

23 (a) IN GENERAL.—Subtitle B of title I of the Work24 force Investment Act of 1998 (29 U.S.C. 2811 et seq.) 

25 is amended— 


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1 (1) by redesignating chapter 6 as chapter 7; 

2 and 

3 (2) by inserting after chapter 5 the following: 

4 ‘‘CHAPTER 6—LIFELONG LEARNING 

5 ACCOUNTS 

6 ‘‘SEC. 135. DEFINITIONS. 

7 ‘‘In this chapter: 

8 ‘‘(1) CAREER PATHWAY.—The term ‘career 

9 pathway’ means a series of connected education and 

10 training strategies and support services that enable 

11 individuals to— 

12 ‘‘(A) secure industry relevant certification; 

13 ‘‘(B) obtain employment within an occupa14 tional area and to advance to higher levels of 

15 future education and employment in that area; 

16 and 

17 ‘‘(C) progress through one or more post18 secondary education or training options. 

19 ‘‘(2) CAREER PLAN.—The term ‘career plan’ 

20 means an individual employment plan described in 

21 section 134(d)(3)(C)(ii) that— 

22 ‘‘(A) describes a worker’s career goal, and 

23 steps or alternative routes associated with ac24 quiring the skills and skill credentials needed to 

25 achieve the goal; and 


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1 ‘‘(B) includes labor market and career in2 formation on local in-demand industries and 

3 high growth industries. 

4 ‘‘(3) EDUCATION OR SKILL DEVELOPMENT.— 

5 The term ‘education or skill development’ means an 

6 activity provided— 

7 ‘‘(A) through a program or course of in8 struction by a postsecondary educational insti9 tution described in section 122(a)(2)(A); 

10 ‘‘(B) through a registered apprenticeship 

11 program; or 

12 ‘‘(C) through a program or course of in13 struction that provides training services, within 

14 the meaning of section 134(d)(4). 

15 ‘‘(4) ELIGIBLE EDUCATION OR SKILL DEVELOP16 MENT EXPENSE.—The term ‘eligible education or 

17 skill development expense’ means an amount paid 

18 for a program or course of instruction (including a 

19 registered apprenticeship program) of career-related 

20 education or skill development, provided by an eligi21 ble provider, including— 

22 ‘‘(A) tuition, fees, and similar payments; 

23 ‘‘(B) payments for books, supplies, equip24 ment, tools, and information technology devices, 

25 required for such program or course; and 


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1 ‘‘(C) any expenses related to an assess2 ment of an eligible worker’s prior learning or 

3 competency used to award credit for or place4 ment in a program or course of instruction. 

5 ‘‘(5) ELIGIBLE PROVIDER.—The term ‘eligible 

6 provider’ means— 

7 ‘‘(A) a postsecondary educational institu8 tion described in section 122(a)(2)(A) or a pro9 vider described in section 122(a)(2)(B); or 

10 ‘‘(B) a provider identified as an eligible 

11 provider of training services under section 

12 122(e). 

13 ‘‘(6) ELIGIBLE WORKER.—The term ‘eligible 

14 worker’ means an individual— 

15 ‘‘(A) who is age 16 or older; 

16 ‘‘(B) on whose behalf a lifelong learning 

17 account is established; and 

18 ‘‘(C) who, on the date of application for 

19 the establishment of the account, was employed, 

20 was self-employed, or had previously been em21 ployed and was looking for work. 

22 ‘‘(7) INSTITUTION OF HIGHER EDUCATION.— 

23 The term ‘institution of higher education’ has the 

24 meaning given the term in section 101(a) of the 

25 Higher Education Act of 1965 (20 U.S.C. 1001(a)). 


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1 ‘‘(8) LABOR MARKET AND CAREER INFORMA2 TION.—The term ‘labor market and career informa3 tion’ means information about— 

4 ‘‘(A) a regional labor market and prom5 ising industries and occupations for a worker in 

6 that market; 

7 ‘‘(B) skills and skill credentials needed by 

8 a worker to achieve the worker’s career goal; 

9 and 

10 ‘‘(C) skill and work experience assessment 

11 results for the worker. 

12 ‘‘(9) LIFELONG LEARNING ACCOUNT.— 

13 ‘‘(A) IN GENERAL.—The term ‘lifelong 

14 learning account’ means an individual eligible 

15 worker’s federally tax exempt portable edu16 cation savings account, established as a trust— 

17 ‘‘(i) that contains contributions, which 

18 may be made by the worker, the worker’s 

19 employer, or a third party, or which may 

20 be made by the worker and matched by the 

21 employer; 

22 ‘‘(ii) that is established for the pur23 pose of paying for eligible education and 

24 skill development expenses, to bolster the 


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1 worker’s existing career or a transition to 

2 a new career; and 

3 ‘‘(iii) for which— 

4 ‘‘(I) no contribution may be ac5 cepted unless the contribution is in 

6 cash; 

7 ‘‘(II) except in the case of a roll8 over contribution, the total amount of 

9 contributions to the account, by the 

10 worker, the employer, or a third 

11 party, may not exceed $5,000 for a 

12 single taxable year; 

13 ‘‘(III) no part of the trust assets 

14 may be invested in life insurance con15 tracts; 

16 ‘‘(IV) no part of the trust assets 

17 may be invested in any collectible (as 

18 defined in section 408(m) of the In19 ternal Revenue Code of 1986); 

20 ‘‘(V) the assets of the trust may 

21 not be commingled with other prop22 erty except in a common trust fund or 

23 common investment fund; 

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1 ual’s account shall be nonforfeitable; 

2 and 

3 ‘‘(VII) no distribution shall be 

4 made from the account except for eli5 gible education or skill development 

6 expenses or after an event described 

7 in section 135E(b)(4)(I). 

8 ‘‘(B) ADJUSTMENT FOR INFLATION.—The 

9 amount set forth in subparagraph (A)(iii)(I) 

10 shall be adjusted in accordance with increases 

11 in the Consumer Price Index for all urban con12 sumers of the Bureau of Labor Statistics. 

13 ‘‘(10) ONE-STOP CENTER.—The term ‘one-stop 

14 center’ means a one-stop center referred to in sec15 tion 134(c). 

16 ‘‘(11) REGISTERED APPRENTICESHIP PRO17 GRAM.—The term ‘registered apprenticeship pro18 gram’ means a program— 

19 ‘‘(A) with an industry skills training ap20 proach that combines technical and theoretical 

21 training— 

22 ‘‘(i) through structured on-the-job 

23 learning with related instruction (in a 

24 classroom or through distance learning) 

25 while an individual is employed, working 


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1 under the direction of qualified personnel 

2 or a mentor, and earning incremental wage 

3 increases aligned to enhanced job pro4 ficiency; and 

5 ‘‘(ii) resulting in the acquisition of na6 tionally recognized and portable certificate, 

7 including a certificate of completion of ap8 prenticeship; and 

9 ‘‘(B) carried out under a plan approved by 

10 the Office of Apprenticeship or a State agency 

11 recognized by the Department of Labor, and 

12 meeting the standards required under sections 

13 29 and 30 of title 29, Code of Federal Regula14 tions (or any corresponding similar regulation 

15 or ruling), including such matters as the re16 quirement for a written apprenticeship agree17 ment. 

18 ‘‘(12) STATE AGENCY.—The term ‘State agen19 cy’ means an agency appointed under section 

20 135B(b)(1). 

21 ‘‘(13) TRUSTEE.—The term ‘trustee’ means a 

22 Governor-designated entity, which may be a bank 

23 (as defined in section 408(n) of the Internal Rev24 enue Code of 1986), that demonstrates to the Gov25 ernor that the entity will establish and manage a 


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1 lifelong learning account in a manner consistent 

2 with the requirements of this chapter, which dem3 onstration may be accomplished by showing a record 

4 of success in establishing and managing similar re5 tirement or education savings accounts. 

6 ‘‘(14) WORKER.—The term ‘worker’ means an 

7 individual— 

8 ‘‘(A) who is age 16 or older; and 

9 ‘‘(B) who is employed, is self-employed, or 

10 was previously employed and is looking for 

11 work; or 

12 ‘‘SEC. 135A. LIFELONG LEARNING ACCOUNT PROGRAMS. 

13 ‘‘The Secretary shall make grants to States to pay 

14 for the Federal share of establishing lifelong learning ac15 count programs, to enhance and expand education and 

16 skill development activities for eligible workers. 

17 ‘‘SEC. 135B. STATE SUPPLEMENTAL PLANS. 

18 ‘‘(a) IN GENERAL.—For a State to be eligible to re19 ceive a grant under this chapter, the Governor of the State 

20 shall submit a five-year plan to the Secretary at such time, 

21 in such manner, and containing such information as the 

22 Secretary may require. 

23 ‘‘(b) CONTENTS.—The plan shall consist of a supple24 ment to the State plan described in section 112 and shall 

25 include, at a minimum— 


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1 ‘‘(1) information identifying a fiscal and admin2 istrative agency that is a member of the State board 

3 appointed by the Governor of the State to design, es4 tablish, and implement the lifelong learning account 

5 program proposed for the State; 

6 ‘‘(2)(A) an assurance that the Governor of the 

7 State will designate, on the recommendation of the 

8 State Board, a trustee to establish and manage the 

9 lifelong learning accounts of eligible workers 

10 throughout the entire State; and 

11 ‘‘(B) a description of any criteria, developed in 

12 cooperation with State board, other than criteria 

13 issued under this chapter, that the Governor will use 

14 to designate such a trustee; 

15 ‘‘(3) information describing the formula the 

16 State will use to allocate funding equitably to local 

17 areas within the State to provide assistance to one18 stop centers, as described in section 135C(a)(1)(C); 

19 ‘‘(4) information describing how the State 

20 board will oversee the design, establishment, and im21 plementation of the lifelong learning accounts pro22 gram; 

23 ‘‘(5) a description of the State requirements for 

24 the program, including requirements to ensure that 

25 the trustee manages the lifelong learning accounts in 


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1 a manner consistent with the fiscal control and ac2 counting procedures described in paragraph (11); 

3 ‘‘(6) a schedule for implementation of the life4 long learning account program, which (notwith5 standing any other provision of this chapter) may 

6 specify implementation in phases if the schedule pro7 vides for full statewide implementation not later 

8 than 2 years after the date of approval of the plan; 

9 ‘‘(7)(A)(i) a description of the career informa10 tion, guidance, counseling, and related activities to 

11 be carried out through the one-stop centers in the 

12 State, to enable workers seeking to establish or use 

13 a lifelong learning account to make informed deci14 sions about meeting their education and skill devel15 opment needs, including labor market and career in16 formation, career planning, and information on the 

17 high-skill, high-demand industries identified under 

18 subparagraph (B) and related career pathways; and 

19 ‘‘(ii) a description of information to be provided 

20 as described in paragraphs (2), (3), and (4) of sec21 tion 135E(a); and 

22 ‘‘(B) information, as reported in the State plan, 

23 identifying high-skill, high-demand industries in each 

24 region of the State or in the State, and sets of 


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1 courses aligned with the needs of those industries, 

2 and services, that constitute career pathways; 

3 ‘‘(8) a description of the methods the State 

4 agency will use to determine and carry out State5 level activities described in section 135C(b) and any 

6 criteria established by the State for State contribu7 tions under section 135C(a)(2); 

8 ‘‘(9) a description of how the State agency will 

9 monitor and assess the implementation (including 

10 operation) of the lifelong learning account program, 

11 including a description of the methods the State 

12 agency will use for collecting and reporting data on 

13 the program as required by the Secretary and pro14 viding technical assistance to the one-stop centers in 

15 the State, to implement and continuously improve 

16 the implementation of a fully operational lifelong 

17 learning account program; 

18 ‘‘(10) information describing how the State will 

19 use the funds the State receives under this chapter 

20 to leverage other Federal, State, local, and private 

21 resources, to maximize the effective use of those re22 sources and maximize the effectiveness of the life23 long learning account program, and to expand the 

24 participation of workers (especially lower-income 


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1 workers) and employers (especially small and mid2 sized employers) in the program; 

3 ‘‘(11) an assurance that the State agency will 

4 provide for fiscal control and accounting procedures 

5 to ensure the proper disbursing of and accounting 

6 for funds made available to the State through the 

7 grant and for funds paid into lifelong learning ac8 counts; 

9 ‘‘(12) a description of the process that the 

10 State used to provide an opportunity for comment 

11 on, and input on the development of, the State sup12 plemental plan by the State board and by the public, 

13 representatives of business, and representatives of 

14 labor organizations; 

15 ‘‘(13)(A) an assurance that the State agency 

16 will, at the request of a eligible worker who has 

17 moved to a second State, direct the trustee man18 aging the worker’s lifelong learning account to 

19 transfer the account to a trustee in the second State 

20 and will otherwise comply with the portability plan 

21 described in subsection (e); and 

22 ‘‘(B) a description of the means by which the 

23 State agency will direct the transfers, and otherwise 

24 comply with the portability plan, referred to in sub25 paragraph (A); 


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1 ‘‘(14) if the State requires a minimum amount 

2 of contributions described in section 135E(b)(2)(B), 

3 the minimum amount; 

4 ‘‘(15) an assurance that the State will partici5 pate in any evaluation or research conducted under 

6 section 135H; and 

7 ‘‘(16) an assurance that the State will use no 

8 more than 10 percent of the funds for administrative 

9 costs. 

10 ‘‘(c) REQUEST FOR WAIVER.—At the election of a 

11 State, the State may include in the plan a request for a 

12 waiver of section 135E(b)(4)(D), to permit a one-stop cen13 ter staff or system operator of the statewide web-based 

14 system in the State to rely on an eligible worker’s state15 ment described in section 135E(b)(4)(C)(iv). The Sec16 retary may approve the request as a portion of the plan, 

17 or may deny the request. 

18 ‘‘(d) SUPPLEMENTAL PLAN SUBMISSION AND AP19 PROVAL.—A State supplemental plan submitted to the 

20 Secretary under this section by a Governor shall be consid21 ered to be approved by the Secretary at the end of the 

22 90-day period beginning on the day the Secretary receives 

23 the plan, unless the Secretary makes a written determina24 tion, during the 90-day period, that the plan is incon25 sistent with the provisions of this chapter. 


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1 ‘‘(e) PORTABILITY PLAN.—The Secretary shall de2 velop, in consultation with State agencies and other enti3 ties and individuals, a plan to ensure the portability of 

4 lifelong learning accounts among States. The plan shall 

5 address the extent of portability of lifelong learning ac6 counts established for eligible workers. The Secretary shall 

7 ensure that States comply with the plan, in determining 

8 whether to approve State supplemental plans under this 

9 section. 

10 ‘‘(f) MODIFICATIONS TO PLAN.—A State may submit 

11 modifications to a State supplemental plan in accordance 

12 with the requirements of this section and section 135C(c) 

13 as necessary during the period covered by the plan. 

14 ‘‘(g) COMPLIANCE WITH PLAN REQUIREMENTS.—A 

15 State shall comply with the requirements of the State sup16 plemental plan to be eligible to receive funds under this 

17 chapter. Nothing in this chapter shall be construed to af18 fect the eligibility of a State for an allotment under section 

19 127 or 132, or financial assistance under the Wagner20 Peyser Act (29 U.S.C. 49 et seq.), on the basis of the 

21 State’s compliance with the requirements of the State sup22 plemental plan. 

23 ‘‘SEC. 135C. STATE ACTIVITIES. 

24 ‘‘(a) IN GENERAL.—A State that receives a grant 

25 under this chapter— 


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1 ‘‘(1) shall use the funds made available through 

2 the grant— 

3 ‘‘(A) for the design, establishment, and im4 plementation (including monitoring and assess5 ment) of lifelong learning accounts programs, 

6 as described in subsection (b); 

7 ‘‘(B) to provide funds to one or more 

8 trustees in the State for the establishment and 

9 management of lifelong learning accounts as de10 scribed in section 135E(b); and 

11 ‘‘(C) to provide assistance to the one-stop 

12 centers in the State, to enable the one-stop cen13 ter staff to carry out the responsibilities de14 scribed in section 135E(a); and 

15 ‘‘(2) may, after carrying out paragraph (1), use 

16 a portion of the grant funds to make contributions 

17 to lifelong learning accounts in the State that meet 

18 criteria established by the State, such as accounts to 

19 which small- and mid-sized employers have made 

20 contributions or accounts of lower-income eligible 

21 workers. 

22 ‘‘(b) STATE-LEVEL ACTIVITIES.—The State agency 

23 shall design, establish, and implement (including moni24 toring and assessing) the lifelong learning accounts pro25 gram, including— 


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1 ‘‘(1) establishing and maintaining a worker-ac2 cessible statewide web-based system to provide the 

3 assistance described in paragraphs (1) through (4) 

4 of section 135E(a) and meet the applicable require5 ments of section 135E(b); 

6 ‘‘(2) developing outreach and marketing activi7 ties to be carried out in the State; 

8 ‘‘(3) reviewing the State list of training services 

9 providers compiled under section 122(e)(4) to deter10 mine the currency and accuracy of the list, updating 

11 the list, improving the format of the list, and in12 creasing access to the list; 

13 ‘‘(4) providing capacity building and technical 

14 assistance to local boards, one-stop center staff, (and 

15 employees of such centers who provide career infor16 mation, guidance, counseling, and related activities), 

17 and eligible providers, with respect to the authorities 

18 and responsibilities of such entities under this chap19 ter; 

20 ‘‘(5) developing, disseminating, and presenting 

21 information on the lifelong learning account program 

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1 zations) and public sector organizations as partners 

2 in the program; and 

3 ‘‘(6) preparing reports for the State board for 

4 the State, containing assessments of the program. 

5 ‘‘(c) STATE BOARD RESPONSIBILITIES.—The State 

6 board for the State shall— 

7 ‘‘(1) make recommendations to the Governor 

8 about the designation of a trustee; 

9 ‘‘(2) provide advice to the Governor and the 

10 State agency on a general vision for a lifelong learn11 ing account program that suggests ways to create 

12 opportunities for all workers, but especially for 

13 workers earning less than 200 percent of the poverty 

14 line or workers without a degree from a 2-year or 

15 4-year nationally recognized postsecondary (or not 

16 participating in an apprenticeship program), to suc17 cessfully participate in the program, with the goal of 

18 improving their skills and the likelihood of long-term 

19 prosperity for themselves and their families; 

20 ‘‘(3) provide independent advice to the State 

21 agency about the operation and performance of the 

22 lifelong learning account program, and, as appro23 priate, enter into contracts for studies or assess24 ments of the program in order to provide that ad25 vice; 


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1 ‘‘(4) review and provide advice to the Governor 

2 on proposals for State supplemental plans; and 

3 ‘‘(5) receive and comment on reports from the 

4 trustee and the State agency, containing assess5 ments of the lifelong learning account program, and 

6 from, as appropriate, the Secretary and other enti7 ties evaluating or researching the program. 

8 ‘‘SEC. 135D. LOCAL SUPPLEMENTAL PLANS. 

9 ‘‘(a) IN GENERAL.—Each local board shall develop 

10 and submit to the Governor a local supplemental plan, in 

11 partnership with the appropriate chief elected official. The 

12 plan shall be consistent with the State supplemental plan. 

13 ‘‘(b) CONTENTS.—The plan shall consist of a supple14 ment to the local plan described in section 118 and shall 

15 include, at a minimum— 

16 ‘‘(1) the description referred to in section 

17 135B(b)(7)(A), with respect to information and ac18 tivities to be provided through the one-stop centers 

19 in the local area involved; 

20 ‘‘(2) an assurance that the local one-stop deliv21 ery system will, through the one-stop centers in the 

22 local area, provide the assistance described in para23 graphs (1) through (5) of section 135E(a); 

24 ‘‘(3) an assurance that the one-stop center staff 

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1 nate activities carried out through the centers with 

2 State-level activities, including the operation of the 

3 statewide web-based system, to provide the assist4 ance described in paragraphs (1) through (4) of sec5 tion 135E(a); 

6 ‘‘(4) information describing how the local board 

7 will use the funds the local area receives under this 

8 chapter to leverage other Federal, State, local, and 

9 private resources, to maximize the effective use of 

10 those resources and maximize the effectiveness of 

11 the lifelong learning account program in the State, 

12 and to expand the participation of workers (espe13 cially lower-income workers) and employers (espe14 cially small- and mid-sized employers) in the pro15 gram; and 

16 ‘‘(5) other assurances as required by the Gov17 ernor. 

18 ‘‘(c) SUPPLEMENTAL PLAN SUBMISSION AND AP19 PROVAL.—A local supplemental plan submitted to a Gov20 ernor under this section by a local board and chief elected 

21 official shall be considered to be approved by the Governor 

22 at the end of the 90-day period beginning on the day the 

23 Governor receives the plan, unless the Governor makes a 

24 written determination, during the 90-day period, that— 


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1 ‘‘(1) deficiencies in activities carried out under 

2 this chapter have been identified, and the local area 

3 has not made acceptable progress in implementing 

4 corrective measures to address the deficiencies; or 

5 ‘‘(2) the plan is inconsistent with the provisions 

6 of this chapter. 

7 ‘‘SEC. 135E. LOCAL ACTIVITIES. 

8 ‘‘(a) ONE-STOP CENTER STAFF.—The one-stop cen9 ter staff that receives assistance under section 

10 135C(a)(1)(C) shall use the assistance to— 

11 ‘‘(1) provide career information, guidance, 

12 counseling, and related activities for workers seeking 

13 to establish or use a lifelong learning account, in14 cluding labor market and career information, career 

15 planning, and information on the high-skill, high-de16 mand industries, in the region involved, that are 

17 identified under section 135B(b)(7)(B) and related 

18 career pathways; 

19 ‘‘(2) provide information on lifelong learning 

20 accounts, and assistance in establishing and using 

21 lifelong learning accounts, including applying to es22 tablish such an account; 

23 ‘‘(3) provide information on eligible providers, 

24 their education and skill development programs or 

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1 ment expenses associated with the programs or 

2 courses; 

3 ‘‘(4) provide information about other public or 

4 private education or skill development activities 

5 (other than activities eligible for funding through a 

6 lifelong learning account) that workers may be eligi7 ble to participate in to meet their education and skill 

8 development needs; 

9 ‘‘(5) carry out outreach and marketing activi10 ties; and 

11 ‘‘(6) meet the applicable requirements of sub12 section (b). 

13 ‘‘(b) TRUSTEES.—A trustee shall establish and man14 age lifelong learning accounts in accordance with the fol15 lowing requirements: 

16 ‘‘(1) ESTABLISHMENT.— 

17 ‘‘(A) REQUEST.—A worker who resides in 

18 a State and who meets the requirements of sec19 tion 135(6) but does not have a lifelong learn20 ing account may, at the election of the worker, 

21 request a lifelong learning account. The worker 

22 may submit the request through a one-stop cen23 ter (to the one-stop center staff) or through the 

24 statewide web-based system (to the system op25 erator). The request shall include an assurance 


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1 that the employer of the worker has not re2 quired, coerced, or influenced the worker to es3 tablish the account. 

4 ‘‘(B) INFORMATION.—On receipt of a re5 quest described in subparagraph (A) for such a 

6 worker, the one-stop center staff involved or the 

7 operator of the web-based system shall supply 

8 information to the worker on the manner in 

9 which the account will be managed, the require10 ments for withdrawing and using funds from 

11 the account, and information on the prohibition 

12 and procedure described in paragraph (4)(H), 

13 and will ask the worker to acknowledge receipt 

14 of the information. 

15 ‘‘(C) ESTABLISHMENT.—On receiving the 

16 acknowledgment from the worker, the one-stop 

17 center staff or system operator shall forward 

18 the application to the appropriate trustee, who 

19 shall establish the account. 

20 ‘‘(2) CONTRIBUTIONS.— 

21 ‘‘(A) IN GENERAL.—A contribution may be 

22 made to an eligible worker’s lifelong learning 

23 account by— 

24 ‘‘(i) the worker; 


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1 ‘‘(ii) the employer of the worker, who 

2 may provide contributions without regard 

3 to the worker’s contributions, or as match4 ing funds; or 

5 ‘‘(iii) a third party, such as the State, 

6 a political subdivision of the State, the 

7 Federal government through any Federal 

8 program; an individual, or a foundation. 

9 ‘‘(B) MINIMUM CONTRIBUTION FOR EM10 PLOYER CONTRIBUTIONS.—The State may re11 quire a worker to provide a minimum amount 

12 of contributions to the worker’s lifelong learn13 ing account before permitting the worker’s em14 ployer to provide employer contributions under 

15 this paragraph. 

16 ‘‘(3) TRANSFERS.—If the eligible worker moves 

17 to a second State, at the request of the eligible 

18 worker, the State described in paragraph (1) shall 

19 direct the trustee to transfer the worker’s lifelong 

20 learning account to the second State, in compliance 

21 with the portability plan described in subsection (d). 

22 The program requirements of the lifelong learning 

23 account program in the second State shall apply to 

24 the account. 

25 ‘‘(4) WITHDRAWAL OF AMOUNTS.— 


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1 ‘‘(A) APPLICATION TO ONE-STOP CENTER

2 STAFF.— 

3 ‘‘(i) IN GENERAL.—An eligible worker 

4 who desires to withdraw funds from the 

5 worker’s lifelong learning account shall 

6 submit an application to withdraw the 

7 funds— 

8 ‘‘(I) at a one-stop center, to the 

9 one-stop center staff; or 

10 ‘‘(II) through the statewide web11 based system, to the system operator. 

12 ‘‘(ii) ASSURANCE.—The application 

13 shall include assurances that— 

14 ‘‘(I) the worker is not requesting 

15 funds for routine health and safety 

16 training or training that relates to use 

17 of new equipment that is otherwise 

18 covered by the employer; 

19 ‘‘(II) the worker is not requesting 

20 funds for an education or skill devel21 opment activity that was previously 

22 provided by the worker’s employer or 

23 that is an activity for which the em24 ployer previously provided financial 

25 assistance (such as tuition assistance) 


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1 to workers, if the employer initiates 

2 discontinuance of the activity or fi3 nancial assistance, respectively, less 

4 than 6 months before the date of the 

5 request; and 

6 ‘‘(III) the employer of the worker 

7 has not required, coerced, or influ8 enced the worker to establish the ac9 count or to use, or refrain from using, 

10 funds from the account for any type 

11 of education or skill development ac12 tivity for which the worker may use 

13 the funds under this chapter, or for 

14 an activity described in subclause (I) 

15 or (II). 

16 ‘‘(B) SERVICES.—The one-stop center staff 

17 or system operator shall offer career informa18 tion, guidance, counseling, and related activities 

19 described in subsection (a)(1) to the eligible 

20 worker. 

21 ‘‘(C) APPLICATION TO TRUSTEE.—On re22 ceiving or declining the services described in 

23 subparagraph (B) the eligible worker shall sub24 mit an application to the one-stop center staff 


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1 or system operator, for the trustee, con2 taining— 

3 ‘‘(i) a career goal (and, if developed, 

4 a career plan); 

5 ‘‘(ii) a description of the career-re6 lated education or skill development activ7 ity to be funded through the withdrawal; 

8 ‘‘(iii) the eligible provider who will 

9 provide the education or skill development 

10 activity; and 

11 ‘‘(iv) a statement of the eligible edu12 cation or skill development expense associ13 ated with the activity. 

14 ‘‘(D) VERIFICATION.—Except in a State 

15 covered by a waiver approved under section 

16 135B(c), on receiving the application, the one17 stop center staff or system operator shall en18 deavor to verify the amount of the expense 

19 specified on the statement described in subpara20 graph (C)(iv). If the one-stop center staff or 

21 system operator is able to verify the amount (or 

22 is in a State covered by such a waiver), and the 

23 application contains the items described in 

24 clauses (i) through (iv) of subparagraph (C), 


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1 the one-stop center staff or system operator 

2 shall forward the application to the trustee. 

3 ‘‘(E) APPROVAL.—The trustee shall ap4 prove the application not later than 10 days 

5 after receipt, unless— 

6 ‘‘(i) the application fails to contain an 

7 item described in clause (i) through (iv) of 

8 subparagraph (C); or 

9 ‘‘(ii) the amount in the eligible work10 er’s account is less than the amount of the 

11 expense specified on the statement de12 scribed in subparagraph (C)(iv). 

13 ‘‘(F) DISBURSEMENT.—On approving the 

14 application, the trustee shall disburse the 

15 amount of the expense specified on the state16 ment to the eligible provider. In the event that 

17 the amount of the expense includes an amount 

18 for an item described in section 135(4)(B), and 

19 that amount is not payable to the provider, the 

20 provider may reimburse the worker for the 

21 amount of that item. 

22 ‘‘(G) FAILURE TO DISBURSE.—If, not ear23 lier than 10 days after the date on which the 

24 trustee has received the application, the trustee 

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1 tion, or has approved the application but failed 

2 to make a disbursement as provided in subpara3 graph (F), the eligible worker may bring an ac4 tion in a court of appropriate jurisdiction to 

5 compel disbursement of the amount. 

6 ‘‘(H) PROHIBITION ON EMPLOYER RE7 QUIREMENTS, COERCION, OR INFLUENCE.— 

8 ‘‘(i) IN GENERAL.—No employer of 

9 the eligible worker, or contributor to the 

10 worker’s lifelong learning account, may re11 quire, coerce, or influence a worker to es12 tablish the account, or to use, or refrain 

13 from using, funds from the account for any 

14 type of education or skill development ac15 tivity for which the worker may use the 

16 funds under this chapter, or any activity 

17 described in subclause (I) or (II) of sub18 paragraph (A)(ii). 

19 ‘‘(ii) GRIEVANCE OR COMPLAINT.—An 

20 eligible worker alleging a violation of this 

21 subparagraph may file a grievance or com22 plaint in accordance with section 181(c). 

23 ‘‘(I) SPECIAL DISBURSEMENTS.—For pur24 poses of this paragraph, any disbursement (or 

25 request for disbursement) made after the acVerDate Mar 15 2010 00:43 May 16, 2013 Jkt 029200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\H1939.IH H1939

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1 count beneficiary dies, becomes disabled (within 

2 the meaning of section 72(m)(7) of the Internal 

3 Revenue Code of 1986), or has attained age 70, 

4 shall be treated as a disbursement (or request 

5 for disbursement) for eligible education or skill 

6 development expenses. 

7 ‘‘(5) TREATMENT OF ACCOUNT.— 

8 ‘‘(A) SEPARATION OR DIVORCE.—If a sep9 aration or divorce agreement awards the life10 long learning account, or the benefits of the ac11 count, of an eligible worker to the worker’s 

12 spouse or former spouse, the trustee shall 

13 transfer the account to the spouse or former 

14 spouse. 

15 ‘‘(B) DEATH.—On the death of an eligible 

16 worker— 

17 ‘‘(i) if the designated beneficiary for 

18 the lifelong learning account elects the ap19 plication of this clause, such designated 

20 beneficiary shall be treated as the account 

21 beneficiary for purposes of such account; 

22 or 

23 ‘‘(ii) in any case not described in 

24 clause (i), the trustee shall pay the funds 


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1 in the account to the beneficiary, and close 

2 the account. 

3 ‘‘(c) OVERSIGHT.—Consistent with its responsibilities 

4 to oversee the one-stop delivery system in the local area, 

5 the local board shall oversee the implementation of the 

6 lifelong learning account program in the local area, and 

7 shall monitor and assess the performance of the program. 

8 ‘‘SEC. 135F. FEDERAL SHARE. 

9 ‘‘(a) IN GENERAL.—The Federal share of the cost 

10 described in section 135A for administering the lifelong 

11 learning accounts program established by this chapter 

12 shall be 80 percent. 

13 ‘‘(b) NON-FEDERAL SHARE.—The State may provide 

14 the non-Federal share of the cost in cash or in-kind, fairly 

15 evaluated, including plant, equipment, or services. The 

16 State may provide the non-Federal share from State, local, 

17 or private sources. 

18 ‘‘SEC. 135G. TRUSTEE REPORTS. 

19 ‘‘(a) PREPARATION.—Each State that carries out a 

20 lifelong learning account program under this chapter shall 

21 require each trustee in the State to annually prepare a 

22 report containing information on contributions to and 

23 withdrawals from such accounts in the State, an assess24 ment of the State lifelong learning account program, and 

25 information on such additional matters as the Secretary 


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1 of Labor, after consultation with the Secretary of the 

2 Treasury, may require. 

3 ‘‘(b) SUBMISSION.—The trustee shall submit each 

4 such report to the Governor and the State legislature of 

5 the State. The Governor shall transmit each such report 

6 to the Secretary of Labor, the Secretary of the Treasury, 

7 and Congress, and shall make the report available to the 

8 general public. 

9 ‘‘SEC. 135H. EVALUATIONS AND OTHER RESEARCH. 

10 ‘‘(a) IN GENERAL.—The Secretary shall conduct 

11 evaluations and other research, directly or through grants 

12 or contracts, to determine the effectiveness of the lifelong 

13 learning account programs carried out under this chapter 

14 in meeting the objectives of this chapter. 

15 ‘‘(b) METHODOLOGY AND RESEARCH DESIGNS.— 

16 The Secretary shall use appropriate methodology and re17 search designs for the evaluations and research. 

18 ‘‘(c) TOPICS.—In conducting the evaluations and re19 search, the Secretary may address topics including wheth20 er the programs increased the wages or salaries of work21 ers, resulted in promotions, new positions, or better posi22 tions for the workers, increased the number of workers 

23 who acquired industry-recognized skill credentials, en24 hanced the job performance of workers, or increased work25 er retention. 


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1 ‘‘(d) REPORT.—The Secretary shall submit to Con2 gress a report containing the results of each evaluation 

3 or research project conducted under this section. 

4 ‘‘SEC. 135I. STUDY ON CONTRIBUTIONS FROM FEDERAL 

5 PROGRAMS. 

6 ‘‘(a) STUDY.—The Secretary, in conjunction with the 

7 Secretary of Health and Human Services, shall conduct 

8 a study concerning whether, and the degree to which, 

9 States should be permitted to use funds available under 

10 a covered program to make contributions to lifelong learn11 ing accounts of eligible workers in the State, and con12 cerning the impacts on the covered program. 

13 ‘‘(b) REPORT.—Not later than 24 months after the 

14 date of enactment of the Skills Investments Act of 2013, 

15 the Secretary of Labor shall submit to Congress a report 

16 containing the results of the study and any recommenda17 tions for legislation the Secretary determines to be appro18 priate. 

19 ‘‘(c) DEFINITION.—In this section, the term ‘covered 

20 program’ means the program of block grants to States for 

21 temporary assistance for needy families established under 

22 part A of title IV of the Social Security Act (42 U.S.C. 

23 601 et seq.), an employment and training program carried 

24 out under section 6(d)(4) of the Food Stamp Act of 1977 

25 (7 U.S.C. 2015(d)(4)), the portion of a program of emVerDate Mar 15 2010 00:43 May 16, 2013 Jkt 029200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\H1939.IH H1939

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1 ployment and training activities carried out under chapter 

2 5 that is funded through individual training accounts de3 scribed in section 134(d)(4)(G), the activities (including 

4 training, other employment services, and provision of al5 lowances) carried out under part II of subchapter B of 

6 chapter 2 of title II of the Trade Act of 1974 (29 U.S.C. 

7 2295 et seq.), and another Federal employment and train8 ing program identified by the Secretary. 

9 ‘‘SEC. 135J. ELIGIBILITY FOR OTHER FEDERAL BENEFITS. 

10 ‘‘No Federal agency may take into consideration the 

11 amount deposited to, or withdrawn from, an eligible work12 er’s lifelong learning account in determining the eligibility 

13 of the worker for any benefit or service under any provi14 sion of Federal law, including any education or skill devel15 opment benefit or service, other than this chapter.’’. 

16 (b) CONFORMING AMENDMENT.—The table of con17 tents in section 1(b) of the Workforce Investment Act of 

18 1998 is amended— 

19 (1) by redesignating the item relating to the 

20 chapter heading of chapter 6, as the item relating to 

21 the chapter heading of chapter 7, of subtitle B of 

22 title I; and 

23 (2) by inserting after the items relating to 

24 chapter 5 of that subtitle the following: 

‘‘CHAPTER 6—LIFELONG LEARNING ACCOUNTS

‘‘Sec. 135. Definitions. 


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‘‘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.’’. 

1 SEC. 4. AUTHORIZATION OF APPROPRIATIONS. 

2 Section 137 of the Workforce Investment Act of 1998 

3 (29 U.S.C. 2872) is amended by adding at the end the 

4 following: 

5 ‘‘(d) LIFELONG LEARNING ACCOUNT PROGRAMS.— 

6 There is authorized to be appropriated to carry out chap7 ter 6 such sums as may be necessary for each of fiscal 

8 years 2015 through 2020.’’. 

9 SEC. 5. CREDIT FOR CONTRIBUTIONS TO LIFELONG LEARN10 ING ACCOUNTS. 

11 (a) IN GENERAL.—Subpart C of part IV of sub12 chapter A of chapter 1 of the Internal Revenue Code of 

13 1986 (relating to refundable credits) is amended by insert14 ing after section 36B the following new section: 

15 ‘‘SEC. 36C. CONTRIBUTIONS TO LIFELONG LEARNING AC16 COUNTS. 

17 ‘‘(a) CREDIT ALLOWED.—In the case of an eligible 

18 individual, there shall be allowed as a credit against the 

19 tax imposed by this chapter for the taxable year an 

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1 tions (other than rollover contributions described in sub2 section (e)(5)) paid in cash during such taxable year by 

3 or on behalf of such individual to a lifelong learning ac4 count of such individual. 

5 ‘‘(b) LIMITATIONS AND DEFINITIONS RELATED TO

6 ALLOWANCE OF CREDIT.— 

7 ‘‘(1) DOLLAR LIMITATION.—The amount of 

8 contributions taken into account under subsection 

9 (a) with respect to any eligible individual for any 

10 taxable year shall not exceed the lesser of— 

11 ‘‘(A) $3,000, or 

12 ‘‘(B) an amount equal to the compensation 

13 (as defined in section 219(f)(1)) includible in 

14 the individual’s gross income for such taxable 

15 year. 

16 ‘‘(2) LIMITATIONS BASED ON MODIFIED AD17 JUSTED GROSS INCOME.— 

18 ‘‘(A) PHASEOUT OF DOLLAR LIMITATION

19 BASED ON ACCOUNT BENEFICIARY’S MODIFIED

20 ADJUSTED GROSS INCOME.—The $3,000 

21 amount contained in paragraph (1)(A) shall be 

22 reduced (but not below zero) by the account 

23 beneficiary’s reduction amount. 

24 ‘‘(B) PER CONTRIBUTOR LIMITATION

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1 JUSTED GROSS INCOME.—In the case of a con2 tributor who is an individual (other than an em3 ployer of the account beneficiary), the aggre4 gate amount of the contributions of such con5 tributor which may be taken into account under 

6 subsection (a) with respect to any eligible indi7 vidual for any taxable year shall not exceed the 

8 excess (if any) of $3,000 over such contribu9 tor’s reduction amount. 

10 ‘‘(C) ACCOUNT BENEFICIARY’S REDUCTION

11 AMOUNT.—For purposes of subparagraph (A), 

12 the account beneficiary’s reduction amount is 

13 the amount which bears the same ratio to 

14 $3,000 as— 

15 ‘‘(i) the excess of— 

16 ‘‘(I) the account beneficiary’s 

17 modified adjusted gross income for 

18 such taxable year, over 

19 ‘‘(II) $100,000 (twice such 

20 amount in the case of a joint return), 

21 bears to 

22 ‘‘(ii) $20,000 (twice such amount in 

23 the case of a joint return). 

24 For purposes of the preceding sentence, the 

25 term ‘modified adjusted gross income’ means 


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1 adjusted gross income increased by any amount 

2 excluded from gross income under section 911, 

3 931, or 933. 

4 ‘‘(D) CONTRIBUTOR’S REDUCTION

5 AMOUNT.—For purposes of subparagraph (B), 

6 the contributor’s reduction amount is the 

7 amount that would be determined under sub8 paragraph (C) if ‘contributor’ were substituted 

9 for ‘account beneficiary’ each place it appears 

10 therein. 

11 ‘‘(E) SPECIAL RULE FOR MARRIED INDI12 VIDUALS FILING A SEPARATE RETURN.—In the 

13 case of a married individual filing a separate re14 turn, subparagraph (C)(I)(II) shall be applied 

15 by substituting ‘zero’ for the dollar amount 

16 therein. 

17 ‘‘(3) TREATMENT OF EMPLOYER CONTRIBU18 TIONS.— 

19 ‘‘(A) EXCLUSION FROM GROSS INCOME.— 

20 Gross income shall not include any contribution 

21 to a lifelong learning account made by an em22 ployer of the account beneficiary to the extent 

23 that the aggregate amount of such contribu24 tions made during the taxable year does not ex25 ceed the limitation in effect under paragraph 


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1 (1) (determined without regard to subpara2 graph (B) of this paragraph) for such taxable 

3 year with respect to such beneficiary. 

4 ‘‘(B) COORDINATION WITH CREDIT.—The 

5 limitation which would (but for this subpara6 graph) apply under paragraph (1) with respect 

7 to the eligible individual for any taxable year 

8 shall be reduced (but not below zero) by the ag9 gregate amount contributed to lifelong learning 

10 accounts of such individual which is excludable 

11 from the taxpayer’s gross income for such tax12 able year under subparagraph (A) (and such 

13 amount shall not be taken into account in de14 termining the credit under subsection (a)). 

15 ‘‘(4) APPLICABLE PERCENTAGE.—For purposes 

16 of this section, the term ‘applicable percentage’ 

17 means— 

18 ‘‘(A) 50 percent with respect to the first 

19 $500 of contributions taken into account under 

20 subsection (a) with respect to any eligible indi21 vidual for any taxable year, and 

22 ‘‘(B) 25 percent with respect to so much of 

23 such contributions as exceeds $500. 

24 ‘‘(5) ELIGIBLE INDIVIDUAL.—For purposes of 

25 this section, the term ‘eligible individual’ means any 


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1 individual for any taxable year if, as of the first day 

2 of such taxable year, such individual has attained 

3 age 16. 

4 ‘‘(c) LIFELONG LEARNING ACCOUNTS.—For pur5 poses of this section— 

6 ‘‘(1) IN GENERAL.—The term ‘lifelong learning 

7 account’ means a trust created or organized in the 

8 United States as a lifelong learning account under 

9 a lifelong learning account program established by a 

10 State under chapter 6 of subtitle B of title I of the 

11 Workforce Investment Act of 1998 exclusively for 

12 the purpose of paying the eligible education or skill 

13 development expenses of the account beneficiary and 

14 maintained by a trustee consist with the require15 ments of section 135E(b) of such Act, but only if 

16 the written governing instrument creating the trust 

17 meets the following requirements: 

18 ‘‘(A) No contribution will be accepted un19 less it is in cash. 

20 ‘‘(B) Except in the case of a rollover con21 tribution described in subsection (e)(5), no con22 tribution will be accepted if such contribution, 

23 when added to all previous contributions to the 

24 trust for the calendar year, would exceed 

25 $5,000. 


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1 ‘‘(C) The trust assets will be held by a 

2 trustee who will administer the trust consistent 

3 with the requirements of such lifelong learning 

4 account program and this section. 

5 ‘‘(D) No part of the trust assets will be in6 vested in life insurance contracts. 

7 ‘‘(E) No part of the trust assets will be in8 vested in any collectible (as defined in section 

9 408(m)). 

10 ‘‘(F) The assets of the trust will not be 

11 commingled with other property except in a 

12 common trust fund or common investment 

13 fund. 

14 ‘‘(G) The interest of an individual in the 

15 balance in his account is nonforfeitable. 

16 ‘‘(H) No distribution shall be made from 

17 the account except— 

18 ‘‘(i) for eligible education or skill de19 velopment expenses, or 

20 ‘‘(ii) after an event described in sub21 section (e)(2)(B). 

22 ‘‘(2) ELIGIBLE EDUCATION OR SKILL DEVELOP23 MENT EXPENSE.—The term ‘eligible education or 

24 skill development expense’ means any eligible edu25 cation or skill development expense (as defined in 


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1 section 135 of the Workforce Investment Act of 

2 1998) which meets the requirements of subclauses 

3 (I) and (II) of section 135E(b)(4)(A)(ii) of such Act. 

4 ‘‘(3) ACCOUNT BENEFICIARY.—The term ‘ac5 count beneficiary’ means the individual on whose be6 half the lifelong learning account was established. 

7 ‘‘(4) TRUSTEE.—The term ‘trustee’ has the 

8 meaning given the term in section 135 of the Work9 force Investment Act of 1998. 

10 ‘‘(5) CERTAIN RULES TO APPLY.—Rules similar 

11 to the following rules shall apply for purposes of this 

12 section: 

13 ‘‘(A) Section 219(f)(3) (relating to time 

14 when contributions deemed made). 

15 ‘‘(B) Section 408(g) (relating to commu16 nity property laws). 

17 ‘‘(C) Section 408(h) (relating to custodial 

18 accounts). 

19 ‘‘(d) TAX TREATMENT OF ACCOUNTS.— 

20 ‘‘(1) IN GENERAL.—A lifelong learning account 

21 is exempt from taxation under this subtitle unless 

22 such account has ceased to be a lifelong learning ac23 count. Notwithstanding the preceding sentence, any 

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1 tion 511 (relating to imposition of tax on unrelated 

2 business income of charitable, etc. organizations). 

3 ‘‘(2) NONQUALIFIED DISTRIBUTION TREATED

4 AS ACCOUNT TERMINATION.—If there is a non5 qualified distribution (as defined in subsection (e)) 

6 from a lifelong learning account for any taxable 

7 year— 

8 ‘‘(A) such account shall cease to be treated 

9 as a lifelong learning account as of the close of 

10 such taxable year, and 

11 ‘‘(B) any amounts in such account as of 

12 the close of such taxable year shall be treated 

13 as distributed to the account beneficiary on the 

14 last day of such taxable year and shall be treat15 ed as not used to pay eligible education or skill 

16 development expenses. 

17 ‘‘(3) APPLICATION OF OTHER RULES TREATING

18 CERTAIN EVENTS AS ACCOUNT TERMINATIONS.— 

19 Rules similar to the rules of paragraphs (2) and (4) 

20 of section 408(e) shall apply to lifelong learning ac21 counts, and any amount treated as distributed under 

22 such rules shall be treated as not used to pay eligible 

23 education or skill development expenses. 

24 ‘‘(e) INCLUSION OF DISTRIBUTIONS IN GROSS IN25 COME.— 


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1 ‘‘(1) INCLUSION IN GROSS INCOME.—Any 

2 amount distributed out of a lifelong learning account 

3 shall be included in gross income by the account 

4 beneficiary. 

5 ‘‘(2) ADDITIONAL TAX.— 

6 ‘‘(A) IN GENERAL.—Except as otherwise 

7 provided in this subsection, the tax imposed by 

8 this chapter on the account beneficiary for any 

9 taxable year in which there is a nonqualified 

10 distribution from a lifelong learning account 

11 shall be increased by 10 percent of the amount 

12 of such distribution. 

13 ‘‘(B) EXCEPTIONS.—Subparagraph (A) 

14 and subsection (d)(2) shall not apply if the dis15 tribution is made after the account beneficiary 

16 dies, becomes disabled (within the meaning of 

17 section 72(m)(7)), or has attained age 70. 

18 ‘‘(3) NONQUALIFIED DISTRIBUTION.—For pur19 poses of this section, the term ‘nonqualified distribu20 tion’ means the excess (if any) of— 

21 ‘‘(A) the aggregate distributions from the 

22 account during the taxable year, over 

23 ‘‘(B) the eligible education or skill develop24 ment expenses of the account beneficiary for 

25 the taxable year. 


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1 ‘‘(4) EXCESS CONTRIBUTIONS RETURNED BE2 FORE DUE DATE OF RETURN.— 

3 ‘‘(A) IN GENERAL.—If any excess con4 tribution is contributed for a taxable year to 

5 any lifelong learning account of an individual, 

6 paragraphs (1) and (2) and subsection (d)(2) 

7 shall not apply to distributions from the lifelong 

8 learning accounts of such individual (to the ex9 tent such distributions do not exceed the aggre10 gate excess contributions to all such accounts of 

11 such individual for such year) if— 

12 ‘‘(i) such distribution is received by 

13 the individual on or before the last day 

14 prescribed by law (including extensions of 

15 time) for filing such individual’s return for 

16 such taxable year, and 

17 ‘‘(ii) such distribution is accompanied 

18 by the amount of net income attributable 

19 to such excess contribution. 

20 Any net income described in clause (ii) shall be 

21 included in the gross income of the individual 

22 for the taxable year in which it is received. 

23 ‘‘(B) EXCESS CONTRIBUTION.—For pur24 poses of subparagraph (A), the term ‘excess 

25 contribution’ means any contribution (other 


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1 than a rollover contribution described in para2 graph (6)) which is not taken into account for 

3 purposes of determining the credit allowed 

4 under subsection (a) or the amount excludable 

5 from the taxpayer’s gross income under sub6 section (b)(3). 

7 ‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 

8 described in this paragraph as a rollover contribu9 tion if it meets the requirements of subparagraphs 

10 (A) and (B). 

11 ‘‘(A) IN GENERAL.—Paragraphs (1) and 

12 (2) and subsection (d)(2) shall not apply to any 

13 amount paid or distributed from a lifelong 

14 learning account to the account beneficiary to 

15 the extent the amount received is paid into a 

16 lifelong learning account for the benefit of such 

17 beneficiary not later than the 60th day after 

18 the day on which the beneficiary receives the 

19 payment or distribution. 

20 ‘‘(B) LIMITATION.—This paragraph shall 

21 not apply to any amount described in subpara22 graph (A) received by an individual from a life23 long learning account if, at any time during the 

24 1-year period ending on the day of such receipt, 

25 such individual received any other amount deVerDate Mar 15 2010 00:43 May 16, 2013 Jkt 029200 PO 00000 Frm 00048 Fmt 6652 Sfmt 6201 E:\BILLS\H1939.IH H1939

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1 scribed in subparagraph (A) from a lifelong 

2 learning account to which paragraphs (1) and 

3 (2) did not apply by reason of the application 

4 of this paragraph. 

5 ‘‘(6) TRANSFER OF ACCOUNT INCIDENT TO DI6 VORCE.—The transfer of an individual’s interest in 

7 a lifelong learning account to an individual’s spouse 

8 or former spouse under a divorce or separation in9 strument described in subparagraph (A) of section 

10 71(b)(2) shall not be considered a taxable transfer 

11 made by such individual notwithstanding any other 

12 provision of this subtitle, and such interest shall, 

13 after such transfer, be treated as a lifelong learning 

14 account with respect to which such spouse is the ac15 count beneficiary. 

16 ‘‘(7) TREATMENT AFTER DEATH OF ACCOUNT

17 BENEFICIARY.— 

18 ‘‘(A) TREATMENT IF DESIGNATED BENE19 FICIARY IS SPOUSE OR ELECTS TO CONTINUE

20 ACCOUNT.—If any individual acquires the ac21 count beneficiary’s interest in a lifelong learn22 ing account by reason of being the designated 

23 beneficiary of such account at the death of the 

24 account beneficiary and such individual elects 

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1 long learning account shall be treated as if such 

2 designated beneficiary were the account bene3 ficiary. 

4 ‘‘(B) OTHER CASES.— 

5 ‘‘(i) IN GENERAL.—If, by reason of 

6 the death of the account beneficiary, any 

7 person acquires the account beneficiary’s 

8 interest in a lifelong learning account in a 

9 case to which subparagraph (A) does not 

10 apply— 

11 ‘‘(I) such account shall cease to 

12 be a lifelong learning account as of 

13 the date of death, and 

14 ‘‘(II) an amount equal to the fair 

15 market value of the assets in such ac16 count on such date shall be includible 

17 if such person is not the estate of 

18 such beneficiary, in such person’s 

19 gross income for the taxable year 

20 which includes such date, or if such 

21 person is the estate of such bene22 ficiary, in such beneficiary’s gross in23 come for the last taxable year of such 

24 beneficiary. 


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1 ‘‘(ii) DEDUCTION FOR ESTATE

2 TAXES.—An appropriate deduction shall be 

3 allowed under section 691(c) to any person 

4 (other than the decedent or the decedent’s 

5 spouse) with respect to amounts included 

6 in gross income under clause (I) by such 

7 person. 

8 ‘‘(f) REPORTS.—The trustee of a lifelong learning ac9 count shall make such reports regarding such account to 

10 the Secretary and to the account beneficiary with respect 

11 to contributions, distributions, and such other matters as 

12 the Secretary may require under regulations. The reports 

13 required by this subsection shall be filed at such time and 

14 in such manner and furnished to such individuals at such 

15 time and in such manner as may be required by those reg16 ulations.’’. 

17 (b) TAX ON EXCESS CONTRIBUTIONS.—Section 4973 

18 of the Internal Revenue Code of 1986 is amended— 

19 (1) by striking ‘‘or’’ at the end of subsection 

20 (a)(4), by inserting ‘‘or’’ at the end of subsection 

21 (a)(5), and by inserting after subsection (a)(5) the 

22 following new paragraph: 

23 ‘‘(6) a lifelong learning account (within the 

24 meaning of section 36C(c)),’’, and 


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1 (2) by adding at the end the following new sub2 section: 

3 ‘‘(h) EXCESS CONTRIBUTIONS TO LIFELONG LEARN4 ING ACCOUNTS.—For purposes of this section, in the case 

5 of lifelong learning accounts (within the meaning of sec6 tion 36C(c)), the term ‘excess contributions’ means the 

7 sum of— 

8 ‘‘(1) the aggregate amount contributed for the 

9 taxable year to the accounts (other than rollover 

10 contributions described in section 36C(e)(5)) which 

11 is not taken into account for purposes of deter12 mining the credit allowed under section 36C(a) or 

13 the amount excludable from the taxpayer’s gross in14 come under section 36C(b)(3), and 

15 ‘‘(2) the amount determined under this sub16 section for the preceding taxable year, reduced by 

17 the sum of— 

18 ‘‘(A) the distributions out of the accounts 

19 with respect to which additional tax was im20 posed under section 36C(e)(2)(A) for the tax21 able year, and 

22 ‘‘(B) the excess (if any) of— 

23 ‘‘(i) the maximum amount of con24 tributions which may be taken into account 


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1 under section 36C(a) for the taxable year, 

2 over 

3 ‘‘(ii) the amount contributed to the 

4 accounts for the taxable year. 

5 For purposes of this subsection, any contribu6 tion which is distributed out of the lifelong 

7 learning account in a distribution to which sec8 tion 36C(e)(5) applies shall be treated as an 

9 amount not contributed.’’. 

10 (c) TAX ON PROHIBITED TRANSACTIONS.— 

11 (1) Paragraph (1) of section 4975(e) of the In12 ternal Revenue Code of 1986 (relating to prohibited 

13 transactions) is amended by redesignating subpara14 graph (G) as subparagraph (H), by striking ‘‘or’’ at 

15 the end of subparagraph (F), and by inserting after 

16 subparagraph (F) the following new subparagraph: 

17 ‘‘(G) a lifelong learning account described 

18 in section 36C(c), or’’. 

19 (2) Subsection (c) of section 4975 of such Code 

20 is amended by adding at the end the following new 

21 paragraph: 

22 ‘‘(7) SPECIAL RULE FOR LIFELONG LEARNING

23 ACCOUNTS.—An individual for whose benefit a life24 long learning account is established shall be exempt 

25 from the tax imposed by this section with respect to 


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1 any transaction concerning such account (which 

2 would otherwise be taxable under this section) if, 

3 with respect to such transaction, the account ceases 

4 to be a lifelong learning account by reason of the ap5 plication of paragraph (2) or (3) of section 36C(d) 

6 to such account.’’. 

7 (d) FAILURE TO PROVIDE REPORTS ON LIFELONG

8 LEARNING ACCOUNTS.—Paragraph (2) of section 6693(a) 

9 of the Internal Revenue Code of 1986 is amended by strik10 ing ‘‘and’’ at the end of subparagraph (D), by redesig11 nating subparagraph (E) as subparagraph (F), and by in12 serting after subparagraph (D) the following new subpara13 graph: 

14 ‘‘(E) section 36C(f) (relating to lifelong 

15 learning accounts), and’’. 

16 (e) EXCLUSION FROM EMPLOYMENT TAXES.— 

17 (1) FEDERAL INSURANCE CONTRIBUTIONS

18 ACT.—Subsection (a) of section 3121 of the Internal 

19 Revenue Code of 1986 is amended by striking ‘‘or’’ 

20 at the end of paragraph (22), by striking the period 

21 at the end of paragraph (23) and inserting ‘‘; or’’, 

22 and by inserting after paragraph (23) the following 

23 new paragraph: 

24 ‘‘(24) any payment made to or for the benefit 

25 of an employee if at the time of such payment it is 


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1 reasonable to believe that the employee will be able 

2 to exclude such payment from income under section 

3 36C(b)(3).’’. 

4 (2) RAILROAD RETIREMENT TAX.—Subsection 

5 (e) of section 3231 of such Code is amended by add6 ing at the end the following new paragraph: 

7 ‘‘(13) LEARNING ACCOUNT CONTRIBUTIONS.— 

8 The term ‘compensation’ shall not include any pay9 ment made to or for the benefit of an employee if 

10 at the time of such payment it is reasonable to be11 lieve that the employee will be able to exclude such 

12 payment from income under section 36C(b)(3).’’. 

13 (3) UNEMPLOYMENT TAX.—Subsection (b) of 

14 section 3306 of such Code is amended by striking 

15 ‘‘or’’ at the end of paragraph (19), by striking the 

16 period at the end of paragraph (20) and inserting ‘‘; 

17 or’’, and by inserting after paragraph (20) the fol18 lowing new paragraph: 

19 ‘‘(21) any payment made to or for the benefit 

20 of an employee if at the time of such payment it is 

21 reasonable to believe that the employee will be able 

22 to exclude such payment from income under section 

23 36C(b)(3).’’. 

24 (4) WITHHOLDING TAX.—Subsection (a) of sec25 tion 3401 of such Code is amended by striking ‘‘or’’ 


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1 at the end of paragraph (22), by striking the period 

2 at the end of paragraph (23) and inserting ‘‘; or’’, 

3 and by inserting after paragraph (23) the following 

4 new paragraph: 

5 ‘‘(24) any payment made to or for the benefit 

6 of an employee if at the time of such payment it is 

7 reasonable to believe that the employee will be able 

8 to exclude such payment from income under section 

9 36C(b)(3).’’. 

10 (5) SOCIAL SECURITY TRUST FUNDS HELD

11 HARMLESS.—There is hereby appropriated (out of 

12 any money in the Treasury not otherwise appro13 priated) for each fiscal year to each fund under the 

14 Social Security Act an amount equal to the reduc15 tion in the transfers to such fund for such fiscal 

16 year by reason of the amendment made by para17 graph (1). 

18 (f) EXEMPTION FROM ERISA REQUIREMENTS.— 

19 Subsection (b) of section 4 of the Employee Retirement 

20 Income Security Act of 1974 is amended by striking ‘‘or’’ 

21 at the end of paragraph (4), by striking the period at the 

22 end of paragraph (5) and inserting ‘‘; or’’, and by insert23 ing after paragraph (5) the following new paragraph: 

24 ‘‘(6) such plan is maintained solely for the pur25 poses of establishing, and making contributions to, 


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1 lifelong learning accounts (within the meaning of 

2 section 36C(c) of the Internal Revenue Code of 

3 1986) on behalf of employees.’’. 

4 (g) CONFORMING AMENDMENTS.— 

5 (1) The table of sections for subpart C of part 

6 IV of subchapter A of chapter 1 of the Internal Rev7 enue Code of 1986 is amended by inserting after the 

8 item relating to section 36B the following new item: 

‘‘Sec. 36C. Contributions to lifelong learning accounts.’’. 

9 (2) Section 6211(b)(4)(A) of such Code is 

10 amended by inserting ‘‘36C,’’ after ‘‘36B,’’. 

11 (3) Section 1324(b)(2) of title 31, United 

12 States Code, is amended by inserting ‘‘36C,’’ after 

13 ‘‘36B,’’. 

14 (h) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2013. 

17 SEC. 6. CREDIT FOR SMALL BUSINESSES WITH RESPECT TO 

18 LIFELONG LEARNING ACCOUNT PROGRAMS. 

19 (a) IN GENERAL.—Subpart D of part IV of sub20 chapter A of chapter 1 of the Internal Revenue Code of 

21 1986 (relating to business related credits) is amended by 

22 adding at the end the following new section: 


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1 ‘‘SEC. 45S. LIFELONG LEARNING ACCOUNTS CREDIT. 

2 ‘‘(a) IN GENERAL.—For purposes of section 38, in 

3 the case of an eligible employer, the lifelong learning ac4 counts credit is the sum of— 

5 ‘‘(1) the lifelong learning account contributions 

6 credit, and 

7 ‘‘(2) the lifelong learning account administra8 tive costs credit. 

9 ‘‘(b) LIFELONG LEARNING ACCOUNT CONTRIBU10 TIONS CREDIT.— 

11 ‘‘(1) IN GENERAL.—For purposes of this sec12 tion, the term ‘lifelong learning account contribu13 tions credit’ means the amount equal to 25 percent 

14 of the aggregate amount paid or incurred by the tax15 payer during the taxable year as contributions to 

16 lifelong learning accounts (within the meaning of 

17 section 36C(c)) of employees of the taxpayer. 

18 ‘‘(2) DOLLAR LIMITATION.—The amount of the 

19 contributions taken into account under paragraph 

20 (1) with respect to any employee for any taxable 

21 year shall not exceed $3,000. 

22 ‘‘(c) LIFELONG LEARNING ACCOUNT ADMINISTRA23 TIVE COSTS CREDIT.— 

24 ‘‘(1) IN GENERAL.—For purposes of this sec25 tion, the term ‘lifelong learning account administra26 tive costs credit’ means the amount equal to 50 perVerDate Mar 15 2010 00:43 May 16, 2013 Jkt 029200 PO 00000 Frm 00058 Fmt 6652 Sfmt 6201 E:\BILLS\H1939.IH H1939

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1 cent of the aggregate amount paid or incurred by 

2 the taxpayer during the taxable year as administra3 tive expenses in carrying out a program to make 

4 payments to the lifelong learning accounts (within 

5 the meaning of section 36C(c)) of employees of the 

6 taxpayer. 

7 ‘‘(2) DOLLAR LIMITATION.—The amount of the 

8 credit determined under this subsection for any tax9 able year shall not exceed— 

10 ‘‘(A) $500 per eligible employer for the 

11 first credit year and each of the 2 taxable years 

12 immediately following the first credit year, and 

13 ‘‘(B) zero for any other taxable year. 

14 ‘‘(3) FIRST CREDIT YEAR.—For purposes of 

15 this subsection, the term ‘first credit year’ means 

16 the first taxable year for which the taxpayer claims 

17 a credit under this section. 

18 ‘‘(4) SPECIAL RULES.—For purposes of this 

19 subsection, rules similar to the rules of paragraphs 

20 (1), (2), and (3) of section 45E(e) shall apply. 

21 ‘‘(d) ELIGIBLE EMPLOYER.—For purposes of this 

22 section, the term ‘eligible employer’ has the meaning given 

23 such term by section 408(p)(2)(C)(I) applied— 

24 ‘‘(1) by substituting ‘250 employees’ for ‘100 

25 employees’ in subclause (I) thereof, 


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1 ‘‘(2) for purposes of determining eligibility for 

2 the lifelong learning account contributions credit for 

3 any taxable year, without regard to subclause (II) 

4 thereof, and 

5 ‘‘(3) for purposes of determining eligibility for 

6 the lifelong learning account administrative costs 

7 credit for any taxable year, by treating the plan de8 scribed in subsection (c)(1) as the plan referred to 

9 in such subclause (II). 

10 ‘‘(e) RECAPTURE IN CASE OF EMPLOYEE COERCION, 

11 ETC.—If the Secretary, after consultation with the Sec12 retary of Labor, determines that the taxpayer has re13 quired, coerced, or influenced an employee to establish a 

14 life long learning account or to use, or refrain from using, 

15 funds from the account for any eligible education or skill 

16 development expense (as defined in section 36C)— 

17 ‘‘(1) the tax imposed on the taxpayer under this 

18 subtitle for the taxable year which includes the date 

19 of such determination shall be increased by the 

20 amount of the credits allowed under this section to 

21 the taxpayer for all taxable years which include any 

22 portion of the period during which such requirement, 

23 coercion, or influence occurred, and 

24 ‘‘(2) no credit shall be allowed to the taxpayer 

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1 cludes the date of such determination and the suc2 ceeding taxable year.’’. 

3 (b) CREDIT PART OF GENERAL BUSINESS CREDIT.— 

4 Section 38(b) of the Internal Revenue Code of 1986 is 

5 amended by striking ‘‘plus’’ at the end of paragraph (35), 

6 by striking the period at the end of paragraph (36) and 

7 inserting ‘‘, plus’’, and by adding at the end the following 

8 new paragraph: 

9 ‘‘(37) the lifelong learning accounts credit de10 termined under section 45S.’’. 

11 (c) DEDUCTION FOR UNUSED CREDIT.—Section 

12 196(c) of the Internal Revenue Code of 1986 is amended 

13 by striking ‘‘and’’ at the end of paragraph (13), by strik14 ing the period at the end of paragraph (14) and inserting 

15 ‘‘, and’’, and by adding at the end the following new para16 graph: 

17 ‘‘(15) the lifelong learning accounts credit de18 termined under section 45S.’’. 

19 (d) CLERICAL AMENDMENT.—The table of sections 

20 for subpart D of part IV of subchapter A of chapter 1 

21 of the Internal Revenue Code of 1986 is amended by add22 ing at the end the following new item: 

‘‘Sec. 45S. Lifelong learning accounts credit.’’. 


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1 (e) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2013. 

Æ 


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