II 

118TH CONGRESS 

2D SESSION S. 3816 

To amend the Internal Revenue Code of 1986 to provide for lifelong learning 

accounts, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 27, 2024 

Ms. KLOBUCHAR introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for lifelong learning accounts, 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 2024’’. 

6 SEC. 2. COVERDELL LIFELONG LEARNING ACCOUNTS. 

7 (a) IN GENERAL.— 

8 (1) RENAMING OF COVERDELL EDUCATION SAV9 INGS ACCOUNTS.—Section 530 of the Internal Rev10 enue Code of 1986 is amended— 


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1 (A) by striking ‘‘Coverdell education sav2 ings account’’ each place it appears and insert3 ing ‘‘Coverdell lifelong learning account’’; and 

4 (B) by striking ‘‘COVERDELL EDU5 CATION SAVINGS ACCOUNTS’’ in the heading 

6 and inserting ‘‘COVERDELL LIFELONG

7 LEARNING ACCOUNTS’’. 

8 (2) CONFORMING AMENDMENTS.— 

9 (A) Section 26(b)(2)(E) of the Internal 

10 Revenue Code of 1986 is amended by striking 

11 ‘‘Coverdell education savings accounts’’ and in12 serting ‘‘Coverdell lifelong learning accounts’’. 

13 (B) Section 72(e)(9) of such Code is 

14 amended— 

15 (i) by striking ‘‘Coverdell education 

16 savings account’’ and inserting ‘‘Coverdell 

17 lifelong learning account’’; and 

18 (ii) by striking ‘‘COVERDELL EDU19 CATION SAVINGS ACCOUNT’’ in the heading 

20 and inserting ‘‘COVERDELL LIFELONG

21 LEARNING ACCOUNT’’. 

22 (C) Section 135(c)(2)(C) of such Code is 

23 amended— 


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1 (i) by striking ‘‘Coverdell education 

2 savings account’’ and inserting ‘‘Coverdell 

3 lifelong learning account’’; and 

4 (ii) by striking ‘‘COVERDELL EDU5 CATION SAVINGS ACCOUNT’’ in the heading 

6 and inserting ‘‘COVERDELL LIFELONG

7 LEARNING ACCOUNT’’. 

8 (D) Section 408A(e)(2)(A)(ii) of such Code 

9 is amended by striking ‘‘Coverdell education 

10 savings account’’ and inserting ‘‘Coverdell life11 long learning account’’. 

12 (E) Section 529(c) of such Code is amend13 ed— 

14 (i) by striking ‘‘COVERDELL EDU15 CATION SAVINGS ACCOUNTS’’ in the head16 ing of paragraph (3)(B)(vi) and inserting 

17 ‘‘COVERDELL LIFELONG LEARNING AC18 COUNT’’; and 

19 (ii) by striking ‘‘an Coverdell edu20 cation savings account’’ in paragraph (6) 

21 and inserting ‘‘a Coverdell lifelong learning 

22 account’’. 

23 (F) Section 877A(e)(2) of such Code is 

24 amended by striking ‘‘Coverdell education savVerDate Sep 11 2014 19:19 Mar 04, 2024 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3816.IS S3816

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1 ings account’’ and inserting ‘‘Coverdell lifelong 

2 learning account’’. 

3 (G) Section 4973 of such Code is amend4 ed— 

5 (i) by striking ‘‘Coverdell education 

6 savings account’’ each place it appears in 

7 subsections (a)(4) and (e)(2)(A) and in8 serting ‘‘Coverdell lifelong learning ac9 count’’; 

10 (ii) by striking ‘‘Coverdell education 

11 savings accounts’’ in subsection (e)(1) and 

12 inserting ‘‘Coverdell lifelong learning ac13 counts’’; and 

14 (iii) by striking ‘‘COVERDELL EDU15 CATION SAVINGS ACCOUNTS’’ in the head16 ing of subsection (e) and inserting 

17 ‘‘COVERDELL LIFELONG LEARNING AC18 COUNT’’. 

19 (H) Section 4975 of such Code is amend20 ed— 

21 (i) by striking ‘‘Coverdell education 

22 savings account’’ each place it appears in 

23 subsections (c)(5) and (e)(1)(F) and in24 serting ‘‘Coverdell lifelong learning ac25 count’’; and 


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1 (ii) by striking ‘‘COVERDELL EDU2 CATION SAVINGS ACCOUNTS’’ in the head3 ing of subsection (c)(5) and inserting 

4 ‘‘COVERDELL LIFELONG LEARNING AC5 COUNTS’’. 

6 (I) Section 6693(a)(2)(F) of such Code is 

7 amended by striking ‘‘Coverdell education sav8 ings accounts’’ and inserting ‘‘Coverdell lifelong 

9 learning accounts’’. 

10 (J) The table of sections for part VIII of 

11 subchapter F of chapter 1 of such Code is 

12 amended by striking ‘‘Coverdell education sav13 ings accounts’’ and inserting ‘‘Coverdell lifelong 

14 learning accounts’’. 

15 (3) TREATMENT OF EXISTING ACCOUNTS.—For 

16 purposes of section 530(b)(1) of the Internal Rev17 enue Code of 1986, any account established before 

18 January 1, 2024, and designated as a Coverdell edu19 cation savings account shall be deemed to have been 

20 designated as a Coverdell lifelong learning account. 

21 (b) EXPANDED USE OF ACCOUNTS.— 

22 (1) ELIGIBLE EXPENSES.— 

23 (A) IN GENERAL.—Section 530(b)(2)(A) of 

24 the Internal Revenue Code of 1986 is amended 

25 by striking ‘‘and’’ at the end of clause (i), by 


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1 striking the period at the end of clause (ii) and 

2 inserting ‘‘, and’’, and by adding at the end the 

3 following new clause: 

4 ‘‘(iii) qualified educational or skill de5 velopment expenses (as defined in para6 graph (5)).’’. 

7 (B) QUALIFIED EDUCATIONAL OR SKILL

8 DEVELOPMENT EXPENSES.—Section 530(b) of 

9 such Code is amended by adding at the end the 

10 following new paragraph: 

11 ‘‘(5) QUALIFIED EDUCATIONAL OR SKILL DE12 VELOPMENT EXPENSES.—The term ‘qualified edu13 cational or skill development expenses’ means— 

14 ‘‘(A) expenses paid or incurred— 

15 ‘‘(i) after the beneficiary attains age 

16 16, and 

17 ‘‘(ii) for participation or enrollment of 

18 the beneficiary in services or activities that 

19 are— 

20 ‘‘(I) training services described in 

21 section 134(c)(3)(D) of the Workforce 

22 Innovation and Opportunity Act (29 

23 U.S.C. 3174(c)(3)(D)) that are of24 fered by a provider included on the 

25 list of eligible providers of training 


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1 services described in section 122 of 

2 such Act (29 U.S.C. 3152), 

3 ‘‘(II) career and technical edu4 cation activities defined in section 3 of 

5 the Carl D. Perkins Career and Tech6 nical Education Act of 2006 (20 

7 U.S.C. 2302) that are offered through 

8 an eligible institution (as defined in 

9 such section), 

10 ‘‘(III) career services described in 

11 clauses (iii), (iv), and (xi) of section 

12 134(c)(2)(A) of the Workforce Inno13 vation and Opportunity Act (29 

14 U.S.C. 3174(c)(2)(A)) that are pro15 vided by providers eligible under sec16 tion 134(c)(2)(C) of such Act, 

17 ‘‘(IV) youth activities described 

18 in section 129(c)(2) of the Workforce 

19 Innovation and Opportunity Act (29 

20 U.S.C. 3164(c)(2)) that are provided 

21 by eligible providers of youth work22 force investment activities under sec23 tion 123 of such Act, or 

24 ‘‘(V) adult education and literacy 

25 activities, as defined in section 203 of 


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1 the Adult Education and Family Lit2 eracy Act (29 U.S.C. 3272), that are 

3 provided by eligible providers of adult 

4 education and literacy activities under 

5 section 231 of such Act (29 U.S.C. 

6 3321), 

7 ‘‘(B) expenses for transportation required 

8 for or provided by any of the services or activi9 ties described in subparagraph (A), 

10 ‘‘(C) expenses for testing necessary for en11 rollment in, or certification in connection with, 

12 services or activities described in subparagraph 

13 (A), or 

14 ‘‘(D) expenses for the purchase of any 

15 computer software (as defined by section 

16 197(e)(3)(B)), computer or peripheral equip17 ment (as defined by section 168(i)(2)(B)), fiber 

18 optic cable related to computer use, internet ac19 cess and related services, if such software, 

20 equipment, or services are to be used by the 

21 beneficiary for services or activities described in 

22 subparagraph (A) during any of the years the 

23 beneficiary is participating in or enrolled in any 

24 of the services or activities described in sub25 paragraph (A).’’. 


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1 (c) MODIFICATION OF RULES RELATING TO AGE RE2 STRICTIONS AND CONTRIBUTIONS.— 

3 (1) $10,000 ACCOUNT LIMIT AFTER AGE 30.— 

4 (A) IN GENERAL.—Subparagraph (E) of 

5 section 530(b)(1) of the Internal Revenue Code 

6 of 1986 is amended by inserting ‘‘in excess of 

7 $10,000’’ after ‘‘any balance to the credit of 

8 the designated beneficiary’’. 

9 (B) CONTRIBUTION LIMIT.—Paragraph (1) 

10 of section 530(b) of such Code is amended by 

11 striking ‘‘or’’ at the end of clause (ii), by strik12 ing the period at the end of clause (iii) and in13 serting ‘‘, or’’, and by adding at the end the fol14 lowing new clause: 

15 ‘‘(iv) in the case of a beneficiary who 

16 is over the age of 30, if such contribution 

17 would result in the balance of the account 

18 exceeding $10,000.’’. 

19 (2) INCREASED AGE LIMIT FOR CONTRIBU20 TIONS.—Clause (ii) of section 530(b)(1)(A) of the 

21 Internal Revenue Code of 1986 is amended by strik22 ing ‘‘age 18’’ and inserting ‘‘age 70’’. 

23 (3) INCREASED CONTRIBUTION LIMITATION

24 FOR INDIVIDUALS OVER AGE 30.— 


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1 (A) IN GENERAL.—Section 

2 530(b)(1)(A)(iii) of the Internal Revenue Code 

3 of 1986 is amended by inserting ‘‘($4,000 in 

4 the case of an account the designated bene5 ficiary of which has attained age of 30 before 

6 the end of the taxable year)’’ after ‘‘$2,000’’. 

7 (B) CONFORMING AMENDMENT.—Section 

8 4973(e)(1)(A) of such Code is amended by 

9 striking ‘‘$2,000’’ and inserting ‘‘the limitation 

10 applicable under section 530(b)(1)(A)(iii)’’. 

11 (4) NO CHANGE IN BENEFICIARY AFTER AGE

12 30.—Paragraph (6) of section 530(d) of the Internal 

13 Revenue Code of 1986 is amended by striking ‘‘shall 

14 not be treated as a distribution for purposes of para15 graph (1) if the new beneficiary’’ and inserting 

16 ‘‘shall not be treated as a distribution for purposes 

17 of paragraph (1) if— 

18 ‘‘(A) the old beneficiary has not attained 

19 age 30 before the date of the change in bene20 ficiary, and 

21 ‘‘(B) the new beneficiary’’. 

22 (d) CREDIT FOR EMPLOYER CONTRIBUTIONS.— 

23 (1) IN GENERAL.—Subpart D of part IV of 

24 subchapter A of chapter 1 of the Internal Revenue 


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1 Code of 1986 is amended by adding at the end the 

2 following new section: 

3 ‘‘SEC. 45BB. EMPLOYEE EDUCATIONAL SKILLS AND DEVEL4 OPMENT EXPENSES. 

5 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

6 the employee educational skills and development contribu7 tion credit determined under this section for any taxable 

8 year is 25 percent of the nonelective contributions made 

9 by the taxpayer during the taxable year to a Coverdell life10 long learning account (as defined in section 530(b)) the 

11 designated beneficiary of which is an employee of the tax12 payer. 

13 ‘‘(b) SPECIAL RULES AND DEFINITIONS.—For pur14 poses of this section— 

15 ‘‘(1) EMPLOYEE.— 

16 ‘‘(A) CERTAIN EMPLOYEES EXCLUDED.— 

17 The term ‘employee’ shall not include— 

18 ‘‘(i) an employee within the meaning 

19 of section 401(c)(1), 

20 ‘‘(ii) any 2-percent shareholder (as de21 fined in section 1372(b)) of an S corpora22 tion, 

23 ‘‘(iii) any 5-percent owner (as defined 

24 in section 416(i)(1)(B)(i)) of taxpayer, or 


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1 ‘‘(iv) any individual who bears any of 

2 the relationships described in subpara3 graphs (A) through (G) of section 

4 152(d)(2) to, or is a dependent described 

5 in section 152(d)(2)(H) of, an individual 

6 described in clause (i), (ii), or (iii). 

7 ‘‘(B) LEASED EMPLOYEES.—The term 

8 ‘employee’ shall include a leased employee with9 in the meaning of section 414(n). 

10 ‘‘(2) NONELECTIVE CONTRIBUTION.—The term 

11 ‘nonelective contribution’ means an employer con12 tribution other than an employer contribution pursu13 ant to a salary reduction arrangement. 

14 ‘‘(3) AGGREGATION AND OTHER RULES MADE

15 APPLICABLE.— 

16 ‘‘(A) AGGREGATION RULES.—All employ17 ers treated as a single employer under sub18 section (b), (c), (m), or (o) of section 414 shall 

19 be treated as a single employer for purposes of 

20 this section. 

21 ‘‘(B) OTHER RULES.—Rules similar to the 

22 rules of subsections (c), (d), and (e) of section 

23 52 shall apply.’’. 

24 (2) CREDIT TREATED AS PART OF GENERAL

25 BUSINESS CREDIT.—Section 38(b) of such Code is 


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1 amended by striking ‘‘plus’’ at the end of paragraph 

2 (40), by striking the period at the end of paragraph 

3 (41) and inserting ‘‘, plus’’, and by adding at the 

4 end the following new paragraph: 

5 ‘‘(42) the employee educational skills and devel6 opment contribution credit determined under section 

7 45BB(a).’’. 

8 (3) CLERICAL AMENDMENT.—The table of sec9 tions for subpart D of part IV of subchapter A of 

10 chapter 1 of such Code is amended by adding at the 

11 end the following new item: 

‘‘Sec. 45BB. Employee educational skills and development expenses.’’. 

12 (e) ALLOWANCE OF DEDUCTION FOR BENE13 FICIARY.— 

14 (1) IN GENERAL.—Part VIII of subchapter B 

15 of chapter 1 of the Internal Revenue Code of 1986 

16 is amended by redesignating section 224 as section 

17 225 and by inserting after section 223 the following 

18 new section: 

19 ‘‘SEC. 224. COVERDELL LIFELONG LEARNING ACCOUNT 

20 CONTRIBUTIONS. 

21 ‘‘(a) IN GENERAL.—In the case of an individual 

22 who— 

23 ‘‘(1) is the designated beneficiary of a Coverdell 

24 lifelong learning account (as defined in section 

25 530(b)(1)), and 


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1 ‘‘(2) has attained the age of 18 before the close 

2 of the taxable year, 

3 there shall be allowed as a deduction an amount equal to 

4 the contributions for the taxable year by or on behalf of 

5 such individual to the account described in paragraph (1). 

6 ‘‘(b) RECONTRIBUTED AMOUNTS.—No deduction 

7 shall be allowed under this section with respect to a roll8 over contribution described in section 530(d)(5).’’. 

9 (2) INCREASE IN ADDITIONAL TAX.— 

10 (A) INCREASE.— 

11 (i) IN GENERAL.—Section 

12 530(d)(4)(A) of the Internal Revenue Code 

13 of 1986 is amended by striking ‘‘10 per14 cent’’ and inserting ‘‘20 percent’’. 

15 (ii) CONFORMING AMENDMENT.—Sec16 tion 529(c)(6) of such Code is amended by 

17 inserting ‘‘, except that ‘10 percent’ shall 

18 be substituted for ‘20 percent’ in subpara19 graph (A) thereof’’ before the period at the 

20 end of the first sentence. 

21 (B) MODIFICATION OF TAX TREATMENT

22 OF DEDUCTIBLE CONTRIBUTIONS.—Paragraph 

23 (1) of section 530(d) is amended to read as fol24 lows: 

25 ‘‘(1) INCLUSION IN GROSS INCOME.— 


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1 ‘‘(A) IN GENERAL.—Any distribution shall 

2 be includible in the gross income of the dis3 tributee as follows: 

4 ‘‘(i) So much of the distribution as is 

5 equal to or less than the deductible amount 

6 shall be fully included in gross income. 

7 ‘‘(ii) So much of the distribution 

8 which exceeds the deductible amount shall 

9 be included in gross income in the manner 

10 as provided in section 72 (determined by 

11 applying such section without regard to 

12 any amounts to which clause (i) applies). 

13 ‘‘(B) DEDUCTIBLE AMOUNT.—For pur14 poses of this paragraph, the term ‘deductible 

15 amount’ means the excess of— 

16 ‘‘(i) the sum of contributions to the 

17 account for which a deduction was allowed 

18 under section 224 in such year and any 

19 preceding taxable year, over 

20 ‘‘(ii) the amount of distributions to 

21 which subparagraph (A)(i) applied to in 

22 any preceding taxable year.’’. 

23 (3) CLERICAL AMENDMENT.—The table of sec24 tions for part VIII of subchapter B of chapter 1 of 

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1 lating to section 224 as relating to section 225 and 

2 by inserting after the item relating to section 223 

3 the following new item: 

‘‘Sec. 224. Coverdell lifelong learning account contributions.’’. 

4 (f) EFFECTIVE DATE.— 

5 (1) IN GENERAL.—Except as otherwise pro6 vided in this subsection, the amendments made by 

7 this section shall take effect on January 1, 2024. 

8 (2) ELIGIBLE EXPENSES.—The amendments 

9 made by subsection (b) shall apply to distributions 

10 made after December 31, 2023. 

11 (3) CONTRIBUTIONS.—The amendments made 

12 by paragraphs (1)(B) and (2) of subsection (c) shall 

13 apply to contributions made after December 31, 

14 2023. 

15 (4) EMPLOYER CONTRIBUTION CREDIT AND

16 BENEFICIARY DEDUCTIONS.—The amendments 

17 made by subsections (d) and (e) shall apply to tax18 able years beginning after December 31, 2023. 

Æ 


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