I 

112TH CONGRESS 

1ST SESSION H. R. 1869 

To amend the Internal Revenue Code of 1986 to establish lifelong learning 

accounts to provide an incentive for employees to save for career-related 

skills development and to promote a competitive workforce through lifelong learning. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 12, 2011 

Mr. LARSON of Connecticut (for himself, Mr. ROSKAM, Mr. POLIS, and Mr. 

PAULSEN) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, 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 Internal Revenue Code of 1986 to establish 

lifelong learning accounts to provide an incentive for 

employees to save for career-related skills development 

and to promote a competitive workforce through lifelong 

learning. 

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 ‘‘Lifelong Learning Ac5 counts Act of 2011’’. 


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1 SEC. 2. LIFELONG LEARNING ACCOUNTS. 

2 (a) IN GENERAL.—Subpart C of part IV of sub3 chapter A of chapter 1 of the Internal Revenue Code of 

4 1986 (relating to refundable credits) is amended by insert5 ing after section 36C the following new section: 

6 ‘‘SEC. 36D. CONTRIBUTIONS TO LIFELONG LEARNING AC7 COUNTS. 

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

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

10 tax imposed by this subtitle for the taxable year an 

11 amount equal to the applicable percentage of the contribu12 tions (other than rollover contributions described in sub13 section (e)(5)) paid in cash during such taxable year by 

14 or on behalf of such individual to a lifelong learning ac15 count of such individual. 

16 ‘‘(b) LIMITATIONS AND DEFINITIONS RELATED TO

17 ALLOWANCE OF CREDIT.— 

18 ‘‘(1) DOLLAR LIMITATION.— 

19 ‘‘(A) IN GENERAL.—The amount of con20 tributions taken into account under subsection 

21 (a) with respect to any eligible individual for 

22 any taxable year shall not exceed the lesser of— 

23 ‘‘(i) $2,500, or 

24 ‘‘(ii) an amount equal to the com25 pensation (as defined in section 219(f)(1)) 


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1 includible in the individual’s gross income 

2 for such taxable year. 

3 ‘‘(B) CATCH-UP CONTRIBUTIONS FOR INDI4 VIDUALS 50 OR OLDER.— 

5 ‘‘(i) IN GENERAL.—In the case of an 

6 individual who has attained the age of 50 

7 before the close of the taxable year, the 

8 dollar limitation otherwise applicable under 

9 subparagraph (A)(i) (without regard to 

10 paragraph (2)) for such taxable year shall 

11 be increased by— 

12 ‘‘(I) $1,000 in the case of taxable 

13 years beginning after 2011 and before 

14 2016, and 

15 ‘‘(II) $1,500 in the case of tax16 able years beginning after 2015. 

17 ‘‘(C) COST-OF-LIVING ADJUSTMENT.— 

18 ‘‘(i) IN GENERAL.—In the case of any 

19 taxable year beginning in a calendar year 

20 after 2015, the $2,500 amount in subpara21 graph (A) shall be increased by an amount 

22 equal to— 

23 ‘‘(I) such dollar amount, multi24 plied by 


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1 ‘‘(II) the cost-of-living adjust2 ment determined under section 1(f) 

3 for the calendar year in which the tax4 able year begins, determined by sub5 stituting ‘calendar year 2014’ for ‘cal6 endar year 1992’ in subparagraph (B) 

7 thereof. 

8 ‘‘(ii) ROUNDING RULES.—If any 

9 amount after adjustment under clause (i) 

10 is not a multiple of $100, such amount 

11 shall be rounded to the next lower multiple 

12 of $100. 

13 ‘‘(2) LIMITATIONS BASED ON MODIFIED AD14 JUSTED GROSS INCOME.— 

15 ‘‘(A) IN GENERAL.—The dollar amount ap16 plicable under paragraph (1) for any taxable 

17 year (without regard to this paragraph) shall be 

18 reduced (but not below zero) by the reduction 

19 amount. 

20 ‘‘(B) REDUCTION AMOUNT.—For purposes 

21 of subparagraph (A), the reduction amount is 

22 the amount which bears the same ratio to the 

23 dollar amount applicable under paragraph (1) 

24 for any taxable year (without regard to this 

25 paragraph) as— 


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1 ‘‘(i) the excess of— 

2 ‘‘(I) the account beneficiary’s 

3 modified adjusted gross income for 

4 such taxable year, over 

5 ‘‘(II) $100,000 (twice such 

6 amount in the case of a joint return), 

7 bears to 

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

9 the case of a joint return). 

10 For purposes of the preceding sentence, the 

11 term ‘modified adjusted gross income’ means 

12 adjusted gross income increased by any amount 

13 excluded from gross income under section 911, 

14 931, or 933. 

15 ‘‘(C) SPECIAL RULE FOR MARRIED INDI16 VIDUALS FILING A SEPARATE RETURN.—In the 

17 case of a married individual filing a separate re18 turn, subparagraph (B)(i)(II) shall be applied 

19 by substituting ‘zero’ for the dollar amount 

20 therein. 

21 ‘‘(3) TREATMENT OF EMPLOYER CONTRIBU22 TIONS.— 

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

24 Gross income shall not include any contribution 

25 to a lifelong learning account made by an emVerDate Mar 15 2010 05:39 May 25, 2011 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1869.IH H1869

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1 ployer of the account beneficiary to the extent 

2 that the aggregate amount of such contribu3 tions made during the taxable year does not ex4 ceed the limitation in effect under paragraph 

5 (1) (determined without regard to subpara6 graph (B) of this paragraph) for such taxable 

7 year with respect to such beneficiary. 

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

9 limitation which would (but for this subpara10 graph) apply under paragraph (1) with respect 

11 to the eligible individual for any taxable year 

12 shall be reduced (but not below zero) by the ag13 gregate amount contributed to lifelong learning 

14 accounts of such individual which is excludable 

15 from the taxpayer’s gross income for such tax16 able year under subparagraph (A) (and such 

17 amount shall not be taken into account in de18 termining the credit under subsection (a)). 

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

20 of this section, the term ‘applicable percentage’ 

21 means— 

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

23 $500 of contributions taken into account under 

24 subsection (a) with respect to any eligible indi25 vidual for any taxable year, and 


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

2 such contributions as exceeds $500. 

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

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

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

6 of such taxable year, such individual has attained 

7 age 18 but has not attained age 71. 

8 ‘‘(c) LIFELONG LEARNING ACCOUNTS.—For pur9 poses of this section— 

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

11 account’ means a trust created or organized in the 

12 United States as a lifelong learning account exclu13 sively for the purpose of paying the qualified edu14 cation expenses of the account beneficiary, but only 

15 if the written governing instrument creating the 

16 trust meets the following requirements: 

17 ‘‘(A) No contribution will be accepted un18 less it is in cash. 

19 ‘‘(B) Except in the case of a rollover con20 tribution described in subsection (e)(5), no con21 tribution will be accepted if such contribution, 

22 when added to all previous contributions to the 

23 trust for the calendar year, would exceed the 

24 dollar amount applicable to the account bene25 ficiary under subsection (b). 


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1 ‘‘(C) The trustee is a bank (as defined in 

2 section 408(n)), an agency or instrumentality of 

3 a State, or another person who demonstrates to 

4 the satisfaction of the Secretary that the man5 ner in which that person will administer the 

6 trust will be consistent with the requirements of 

7 this section. 

8 ‘‘(D) No part of the trust assets will be in9 vested in life insurance contracts. 

10 ‘‘(E) No part of the trust assets will be in11 vested in any collectible (as defined in section 

12 408(m)). 

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

14 commingled with other property except in a 

15 common trust fund or common investment 

16 fund. 

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

18 balance in his account is nonforfeitable. 

19 ‘‘(2) QUALIFIED EDUCATION EXPENSES.—The 

20 term ‘qualified education expenses’ means amounts 

21 paid by the account beneficiary for education of, or 

22 courses of instruction (including training and ap23 prenticeship programs) for, the account beneficiary, 

24 including— 


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1 ‘‘(A) tuition, fees, and similar payments, 

2 and 

3 ‘‘(B) books, supplies, equipment, tools, and 

4 information technology devices, required for 

5 such course or education. 

6 Such term shall not include amounts paid for any 

7 course or other education involving sports, games, or 

8 hobbies. 

9 ‘‘(3) ACCOUNT BENEFICIARY.—The term ‘ac10 count beneficiary’ means the individual on whose be11 half the lifelong learning account was established. 

12 ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar 

13 to the following rules shall apply for purposes of this 

14 section: 

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

16 when contributions deemed made). 

17 ‘‘(B) Section 408(g) (relating to commu18 nity property laws). 

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

20 accounts). 

21 ‘‘(d) TAX TREATMENT OF ACCOUNTS.— 

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

23 is exempt from taxation under this subtitle unless 

24 such account has ceased to be a lifelong learning ac25 count. Notwithstanding the preceding sentence, any 


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1 such account is subject to the taxes imposed by sec2 tion 511 (relating to imposition of tax on unrelated 

3 business income of charitable, etc. organizations). 

4 ‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 

5 to the rules of paragraphs (2) and (4) of section 

6 408(e) shall apply to lifelong learning accounts, and 

7 any amount treated as distributed under such rules 

8 shall be treated as not used to pay qualified edu9 cation expenses. 

10 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 

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

12 amount distributed out of a lifelong learning account 

13 shall be included in gross income by the distributee. 

14 ‘‘(2) ADDITIONAL TAX.— 

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

16 provided in this subsection, the tax imposed by 

17 this chapter on the account beneficiary for any 

18 taxable year in which there is a nonqualified 

19 distribution from a lifelong learning account 

20 shall be increased by 10 percent of the amount 

21 of such distribution. 

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

23 shall not apply if the distribution is made after 

24 the account beneficiary dies, becomes disabled 


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1 (within the meaning of section 72(m)(7)), or 

2 has attained age 70. 

3 ‘‘(3) NONQUALIFIED DISTRIBUTION.—For pur4 poses of this section, the term ‘nonqualified distribu5 tion’ means the excess (if any) of— 

6 ‘‘(A) the aggregate distributions from the 

7 account during the taxable year, over 

8 ‘‘(B) the qualified education expenses of 

9 the account beneficiary for the taxable year. 

10 ‘‘(4) EXCESS CONTRIBUTIONS RETURNED BE11 FORE DUE DATE OF RETURN.— 

12 ‘‘(A) IN GENERAL.—If any excess con13 tribution is contributed for a taxable year to 

14 any lifelong learning account of an individual, 

15 paragraphs (1) and (2) shall not apply to dis16 tributions from the lifelong learning accounts of 

17 such individual (to the extent such distributions 

18 do not exceed the aggregate excess contribu19 tions to all such accounts of such individual for 

20 such year) if— 

21 ‘‘(i) such distribution is received by 

22 the individual on or before the last day 

23 prescribed by law (including extensions of 

24 time) for filing such individual’s return for 

25 such taxable year, and 


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1 ‘‘(ii) such distribution is accompanied 

2 by the amount of net income attributable 

3 to such excess contribution. 

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

5 included in the gross income of the individual 

6 for the taxable year in which it is received. 

7 ‘‘(B) EXCESS CONTRIBUTION.—For pur8 poses of subparagraph (A), the term ‘excess 

9 contribution’ means any contribution (other 

10 than a rollover contribution described in para11 graph (5)) which is not taken into account for 

12 purposes of determining the credit allowed 

13 under subsection (a) or the amount excludable 

14 from the taxpayer’s gross income under sub15 section (b)(3). 

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

17 described in this paragraph as a rollover contribu18 tion if it meets the requirements of subparagraphs 

19 (A) and (B). 

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

21 (2) shall not apply to any amount paid or dis22 tributed from a lifelong learning account to the 

23 account beneficiary to the extent the amount 

24 received is paid into a lifelong learning account 

25 for the benefit of such beneficiary not later 


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1 than the 60th day after the day on which the 

2 beneficiary receives the payment or distribution. 

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

4 not apply to any amount described in subpara5 graph (A) received by an individual from a life6 long learning account if, at any time during the 

7 1-year period ending on the day of such receipt, 

8 such individual received any other amount de9 scribed in subparagraph (A) from a lifelong 

10 learning account to which paragraphs (1) and 

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

12 of this paragraph. 

13 ‘‘(6) TRANSFER OF ACCOUNT INCIDENT TO DI14 VORCE.—The transfer of an individual’s interest in 

15 a lifelong learning account to an individual’s spouse 

16 or former spouse under a divorce or separation in17 strument described in subparagraph (A) of section 

18 71(b)(2) shall not be considered a taxable transfer 

19 made by such individual notwithstanding any other 

20 provision of this subtitle, and such interest shall, 

21 after such transfer, be treated as a lifelong learning 

22 account with respect to which such spouse is the ac23 count beneficiary. 

24 ‘‘(7) TREATMENT AFTER DEATH OF ACCOUNT

25 BENEFICIARY.— 


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1 ‘‘(A) TREATMENT IF DESIGNATED BENE2 FICIARY IS SPOUSE.—If the account bene3 ficiary’s surviving spouse acquires such bene4 ficiary’s interest in a lifelong learning account 

5 by reason of being the designated beneficiary of 

6 such account at the death of the account bene7 ficiary, such lifelong learning account shall be 

8 treated as if the spouse were the account bene9 ficiary. 

10 ‘‘(B) OTHER CASES.— 

11 ‘‘(i) IN GENERAL.—If, by reason of 

12 the death of the account beneficiary, any 

13 person acquires the account beneficiary’s 

14 interest in a lifelong learning account in a 

15 case to which subparagraph (A) does not 

16 apply— 

17 ‘‘(I) such account shall cease to 

18 be a lifelong learning account as of 

19 the date of death, and 

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

21 market value of the assets in such ac22 count on such date shall be includible 

23 if such person is not the estate of 

24 such beneficiary, in such person’s 

25 gross income for the taxable year 


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1 which includes such date, or if such 

2 person is the estate of such bene3 ficiary, in such beneficiary’s gross in4 come for the last taxable year of such 

5 beneficiary. 

6 ‘‘(ii) DEDUCTION FOR ESTATE

7 TAXES.—An appropriate deduction shall be 

8 allowed under section 691(c) to any person 

9 (other than the decedent or the decedent’s 

10 spouse) with respect to amounts included 

11 in gross income under clause (i) by such 

12 person. 

13 ‘‘(f) REPORTS.—The trustee of a lifelong learning ac14 count shall make such reports regarding such account to 

15 the Secretary and to the account beneficiary with respect 

16 to contributions, distributions, and such other matters as 

17 the Secretary may require under regulations. The reports 

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

19 in such manner and furnished to such individuals at such 

20 time and in such manner as may be required by those reg21 ulations.’’. 

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

23 of the Internal Revenue Code of 1986 is amended— 

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

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


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

2 following new paragraph: 

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

4 meaning of section 36D(c)),’’, and 

5 (2) by adding at the end the following new sub6 section: 

7 ‘‘(h) EXCESS CONTRIBUTIONS TO LIFELONG LEARN8 ING ACCOUNTS.—For purposes of this section, in the case 

9 of lifelong learning accounts (within the meaning of sec10 tion 36D(c)), the term ‘excess contributions’ means the 

11 sum of— 

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

13 taxable year to the accounts (other than rollover 

14 contributions described in section 36D(e)(5)) which 

15 is not taken into account for purposes of deter16 mining the credit allowed under section 36D(a) or 

17 the amount excludable from the taxpayer’s gross in18 come under section 36D(b)(3), and 

19 ‘‘(2) the amount determined under this sub20 section for the preceding taxable year, reduced by 

21 the sum of— 

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

23 with respect to which additional tax was im24 posed under section 36D(e)(2)(A) for the tax25 able year, and 


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1 ‘‘(B) the excess (if any) of— 

2 ‘‘(i) the maximum amount of con3 tributions which may be taken into account 

4 under section 36D(a) for the taxable year, 

5 over 

6 ‘‘(ii) the amount contributed to the 

7 accounts for the taxable year. 

8 For purposes of this subsection, any contribu9 tion which is distributed out of the lifelong 

10 learning account in a distribution to which sec11 tion 36D(e)(4) applies shall be treated as an 

12 amount not contributed.’’. 

13 (c) TAX ON PROHIBITED TRANSACTIONS.— 

14 (1) Paragraph (1) of section 4975(e) of the In15 ternal Revenue Code of 1986 (relating to prohibited 

16 transactions) is amended by redesignating subpara17 graph (G) as subparagraph (H), by striking ‘‘or’’ at 

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

19 subparagraph (F) the following new subparagraph: 

20 ‘‘(G) a lifelong learning account described 

21 in section 36D(c), or’’. 

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

23 is amended by adding at the end the following new 

24 paragraph: 


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1 ‘‘(7) SPECIAL RULE FOR LIFELONG LEARNING

2 ACCOUNTS.—An individual for whose benefit a life3 long learning account is established shall be exempt 

4 from the tax imposed by this section with respect to 

5 any transaction concerning such account (which 

6 would otherwise be taxable under this section) if, 

7 with respect to such transaction, the account ceases 

8 to be a lifelong learning account by reason of the ap9 plication of section 36D(d)(2) to such account.’’. 

10 (d) FAILURE TO PROVIDE REPORTS ON LIFELONG

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

12 of the Internal Revenue Code of 1986 is amended by re13 designating subparagraphs (A) through (E) as subpara14 graphs (B) through (F), respectively, and by inserting be15 fore subparagraph (B) (as so redesignated) the following 

16 new subparagraph: 

17 ‘‘(A) section 36D(f) (relating to lifelong 

18 learning accounts),’’. 

19 (e) EXCLUSION FROM EMPLOYMENT TAXES.— 

20 (1) FEDERAL INSURANCE CONTRIBUTIONS

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

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

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

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


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1 and by inserting after paragraph (23) the following 

2 new paragraph: 

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

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

5 reasonable to believe that the employee will be able 

6 to exclude such payment from income under section 

7 36D(b)(3).’’. 

8 (2) RAILROAD RETIREMENT TAX.—Subsection 

9 (e) of section 3231 of such Code is amended by add10 ing at the end the following new paragraph: 

11 ‘‘(13) LEARNING ACCOUNT CONTRIBUTIONS.— 

12 The term ‘compensation’ shall not include any pay13 ment made to or for the benefit of an employee if 

14 at the time of such payment it is reasonable to be15 lieve that the employee will be able to exclude such 

16 payment from income under section 36D(b)(3).’’. 

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

18 section 3306 of such Code is amended by striking 

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

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

21 or’’, and by inserting after paragraph (20) the fol22 lowing new paragraph: 

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

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

25 reasonable to believe that the employee will be able 


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1 to exclude such payment from income under section 

2 36D(b)(3).’’. 

3 (4) WITHHOLDING TAX.—Subsection (a) of sec4 tion 3401 of such Code is amended by striking ‘‘or’’ 

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

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

7 and by inserting after paragraph (23) the following 

8 new paragraph: 

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

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

11 reasonable to believe that the employee will be able 

12 to exclude such payment from income under section 

13 36D(b)(3).’’. 

14 (5) EMPLOYER CONTRIBUTIONS REQUIRED TO

15 BE SHOWN ON W–2.—Subsection (a) of section 6051 

16 of such Code is amended by striking ‘‘and’’ at the 

17 end of paragraph (13), by striking the period at the 

18 end of paragraph (14) and inserting ‘‘, and’’, and by 

19 inserting after paragraph (14) the following new 

20 paragraph: 

21 ‘‘(15) the amount contributed to any lifelong 

22 learning account (as defined in section 36D) on be23 half of such employee.’’. 

24 (6) SOCIAL SECURITY TRUST FUNDS HELD

25 HARMLESS.—There is hereby appropriated (out of 


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1 any money in the Treasury not otherwise appro2 priated) for each fiscal year to each fund under the 

3 Social Security Act an amount equal to the reduc4 tion in the transfers to such fund for such fiscal 

5 year by reason of the amendment made by para6 graph (1). 

7 (f) EXEMPTION FROM ERISA REQUIREMENTS.— 

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

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

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

11 end of paragraph (5) and inserting ‘‘; or’’, and by insert12 ing after paragraph (5) the following new paragraph: 

13 ‘‘(6) such plan is maintained solely for the pur14 poses of establishing, and making contributions to, 

15 lifelong learning accounts (as defined in section 36D 

16 of the Internal Revenue Code of 1986) on behalf of 

17 employees.’’. 

18 (g) CONFORMING AMENDMENTS.— 

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

20 IV of subchapter A of chapter 1 of the Internal Rev21 enue Code of 1986 is amended by inserting after the 

22 item relating to section 36C the following new item: 

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

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

24 amended by inserting ‘‘36D,’’ after ‘‘36C,’’. 


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

2 States Code, is amended by inserting ‘‘36D,’’ after 

3 ‘‘36C,’’. 

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

5 this section shall apply to taxable years beginning after 

6 the date of the enactment of this Act. 

7 SEC. 3. CREDIT FOR EMPLOYER CONTRIBUTIONS TO LIFE8 LONG LEARNING ACCOUNTS AND ADMINIS9 TRATIVE EXPENSES OF CERTAIN SMALL EM10 PLOYERS. 

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

13 1986 (relating to business related credits) is amended by 

14 adding at the end the following new section: 

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

16 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

17 lifelong learning accounts credit is the sum of— 

18 ‘‘(1) the lifelong learning account contributions 

19 credit, and 

20 ‘‘(2) in the case of an eligible employer, the 

21 small employer lifelong learning account administra22 tive costs credit. 

23 ‘‘(b) LIFELONG LEARNING ACCOUNT CONTRIBU24 TIONS CREDIT.— 


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1 ‘‘(1) IN GENERAL.—For purposes of this sec2 tion, the term ‘lifelong learning account contribu3 tions credit’ means the amount equal to 25 percent 

4 of the aggregate amount paid or incurred by the tax5 payer during the taxable year as contributions to 

6 lifelong learning accounts (as defined in section 

7 36D) of employees of the taxpayer. 

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

9 contributions taken into account under paragraph 

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

11 year shall not exceed $2,500. 

12 ‘‘(c) SMALL EMPLOYER LIFELONG LEARNING AC13 COUNT ADMINISTRATIVE COSTS CREDIT.— 

14 ‘‘(1) IN GENERAL.—For purposes of this sec15 tion, the term ‘small employer lifelong learning ac16 count administrative costs credit’ means, in the case 

17 of an eligible employer, the amount equal to 50 per18 cent of the aggregate amount paid or incurred by 

19 the taxpayer during the taxable year as administra20 tive expenses in carrying out a program to make 

21 payments to the lifelong learning accounts (as de22 fined in section 36D) of employees of the taxpayer. 

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

24 credit determined under this subsection for any tax25 able year shall not exceed— 


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1 ‘‘(A) $500 for the first credit year and 

2 each of the 2 taxable years immediately fol3 lowing the first credit year, and 

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

5 ‘‘(3) DEFINITIONS.—For purposes of this sub6 section— 

7 ‘‘(A) ELIGIBLE EMPLOYER.—The term ‘eli8 gible employer’ has the meaning given such 

9 term by section 408(p)(2)(C)(i). 

10 ‘‘(B) FIRST CREDIT YEAR.—The term 

11 ‘first credit year’ means the first taxable year 

12 for which the taxpayer claims a credit under 

13 this section. 

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

15 subsection, rules similar to the rules of paragraphs 

16 (1), (2), and (3) of section 45E(e) shall apply.’’. 

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

18 Section 38(b) of such Code is amended by striking ‘‘plus’’ 

19 at the end of paragraph (35), by striking the period at 

20 the end of paragraph (36) and inserting ‘‘, plus’’, and by 

21 adding at the end the following new paragraph: 

22 ‘‘(37) the lifelong learning accounts credit de23 termined under section 45S.’’. 

24 (c) DEDUCTION FOR UNUSED CREDIT.—Section 

25 196(c) of such Code is amended by striking ‘‘and’’ at the 


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25 

•HR 1869 IH

1 end of paragraph (13), by striking the period at the end 

2 of paragraph (14) and inserting ‘‘, and’’, and by adding 

3 at the end the following new paragraph: 

4 ‘‘(15) the lifelong learning accounts credit de5 termined under section 45S.’’. 

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

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

8 of such Code is amended by adding at the end the fol9 lowing new item: 

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

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

11 this section shall apply to taxable years beginning after 

12 the date of the enactment of this Act. 

Æ 


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