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[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4023 Introduced in Senate (IS)]

<DOC>

117th CONGRESS
  2d Session
                                S. 4023

   To amend the Internal Revenue Code of 1986 to establish Lifelong 
                Learning and Training Account programs.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             April 7, 2022

 Mr. Warner (for himself and Mr. Coons) 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 establish Lifelong 
                Learning and Training Account programs.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Lifelong Learning and Training 
Account Act of 2021''.

SEC. 2. LIFELONG LEARNING AND TRAINING ACCOUNT PROGRAMS.

    (a) In General.--Part VIII of subchapter F of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 530 
the following new section:

``SEC. 530A. LIFELONG LEARNING AND TRAINING ACCOUNT PROGRAMS.

    ``(a) In General.--A Lifelong Learning and Training Account program 
shall be exempt from taxation under this subtitle. Notwithstanding the 
preceding sentence, such program shall be subject to the taxes imposed 
by section 511.
    ``(b) Lifelong Learning and Training Account Program.--For purposes 
of this section--
            ``(1) In general.--The term `Lifelong Learning and Training 
        Account program' means a program established and maintained by 
        a State or agency or instrumentality thereof--
                    ``(A) under which the designated beneficiary of the 
                account or their employer may make contributions to an 
                account which is established for the purpose of meeting 
                the qualified training expenditures of such 
                beneficiary, and
                    ``(B) which meets the other requirements of this 
                section.
            ``(2) Qualified trust.--Except to the extent provided in 
        regulations, a program shall not be treated as a Lifelong 
        Learning and Training Account program unless such program 
        provides that amounts are held in a qualified trust and such 
        program has received a ruling or determination by the Secretary 
        that such program meets the applicable requirements for a 
        Lifelong Learning and Training Account program. For purposes of 
        the preceding sentence, the term `qualified trust' means a 
        trust which is created or organized in the United States for 
        the exclusive benefit of designated beneficiaries and with 
        respect to which the requirements of paragraphs (2) and (5) of 
        section 408(a) are met.
            ``(3) Requirements.--
                    ``(A) In general.--A program shall not be treated 
                as a Lifelong Learning and Training Account program 
                unless it provides--
                            ``(i) that contributions may only be made 
                        in cash,
                            ``(ii) separate accounting for each 
                        designated beneficiary,
                            ``(iii) that no interest in the program or 
                        any portion thereof may be used as security for 
                        a loan,
                            ``(iv) that no contributions may be made on 
                        behalf of a designated beneficiary--
                                    ``(I) in excess of $2,000 during 
                                any calendar year,
                                    ``(II) if the total amount in the 
                                account of such beneficiary is in 
                                excess of $15,000, or
                                    ``(III) during any calendar year 
                                which begins after such beneficiary 
                                attains 57 years of age,
                            ``(v) that any distribution shall be made 
                        in accordance with the requirements under 
                        subparagraphs (B) and (C), and
                            ``(vi) that required distributions shall be 
                        made in accordance with paragraph (6).
                    ``(B) Method of distribution.--
                            ``(i) In general.--For purposes of any 
                        distribution from the account of a designated 
                        beneficiary under a Lifelong Learning and 
                        Training Account program--
                                    ``(I) the applicable amount of such 
                                distribution shall be drawn from 
                                amounts transferred to the account of 
                                the designated beneficiary pursuant to 
                                paragraph (4) and any earnings thereon, 
                                and
                                    ``(II) after application of 
                                subclause (I), the remainder of such 
                                distribution shall be drawn from 
                                amounts contributed by the designated 
                                beneficiary or their employer and any 
                                earnings thereon.
                            ``(ii) Applicable amount.--For purposes of 
                        clause (i)(I), the applicable amount shall be 
                        an amount equal to the lesser of--
                                    ``(I) 50 percent of the amount of 
                                the distribution, or
                                    ``(II) the total amount of any 
                                available funds in the account of the 
                                designated beneficiary which were 
                                transferred pursuant to paragraph (4) 
                                and any earnings thereon.
                            ``(iii) Other methods.--The Secretary may 
                        amend, alter, or supplement the distribution 
                        requirements under this subparagraph in such 
                        manner as the Secretary deems appropriate.
                    ``(C) Reporting.--For purposes of any distribution 
                from the account of a designated beneficiary under a 
                Lifelong Learning and Training Account program, the 
                administrator shall provide the beneficiary and the 
                Secretary with such information as the Secretary deems 
                appropriate, including--
                            ``(i) the amount of such distribution, 
                        including the applicable amount of such 
                        distribution (as described in subparagraph 
                        (B)(ii)), and
                            ``(ii) whether such distribution was 
                        provided--
                                    ``(I) directly to the program 
                                described in clauses (i) through (iii) 
                                of subsection (e)(5)(A) which provides 
                                training to the beneficiary, or
                                    ``(II) to reimburse the beneficiary 
                                for any qualified training expenditures 
                                incurred by such beneficiary.
            ``(4) Matching funds.--
                    ``(A) Transfer to beneficiary account.--
                            ``(i) In general.--Out of any moneys in the 
                        Treasury not otherwise appropriated, the 
                        Secretary shall transfer to the account of any 
                        designated beneficiary under a Lifelong 
                        Learning and Training Account program an amount 
                        equal to any amounts contributed to such 
                        account by such beneficiary or their employer 
                        which occur during any calendar year which 
                        begins after the date on which such beneficiary 
                        attains 24 years of age.
                            ``(ii) Limitation.--Any amounts transferred 
                        by the Secretary to the account of any 
                        designated beneficiary pursuant to clause (i) 
                        during any calendar year--
                                    ``(I) shall not exceed $1,000, and
                                    ``(II) shall not be subject to the 
                                limitation under paragraph 
                                (3)(A)(iv)(I).
                    ``(B) Deposit of matching funds.--Any amounts 
                required to be transferred to the account of a 
                designated beneficiary under subparagraph (A) shall be 
                transferred by the Secretary as soon as is practicable 
                following any contribution to such account by such 
                beneficiary or their employer.
                    ``(C) Reduction in matching funds.--
                            ``(i) In general.--For each applicable 
                        taxable year, the dollar amount in subparagraph 
                        (A)(ii)(I) shall be reduced (but not below 
                        zero) by an amount equal to the greater of--
                                    ``(I) an amount which bears the 
                                same ratio to such dollar amount as--
                                            ``(aa) the amount (not less 
                                        than zero) equal to the 
                                        adjusted gross income of the 
                                        taxpayer for the applicable 
                                        taxable year minus $72,000, 
                                        bears to
                                            ``(bb) $10,000, or
                                    ``(II) an amount which bears the 
                                same ratio to such dollar amount as--
                                            ``(aa) the amount (not less 
                                        than zero) equal to the earned 
                                        income (as described in section 
                                        32(c)(2)) of the designated 
                                        beneficiary for the applicable 
                                        taxable year minus $72,000, 
                                        bears to
                                            ``(bb) $10,000.
                            ``(ii) Married individuals.--In the case of 
                        a designated beneficiary who is married (within 
                        the meaning of section 7703)--
                                    ``(I) if such beneficiary has filed 
                                a joint return for the applicable 
                                taxable year, each of the dollar 
                                amounts under clause (i)(I) shall be 
                                doubled for such year, or
                                    ``(II) if such beneficiary has not 
                                filed a joint return for the applicable 
                                taxable year, the dollar amount in 
                                subparagraph (A)(ii)(I) shall be 
                                reduced to zero for such year.
                            ``(iii) Applicable taxable year.--For 
                        purposes of this subparagraph, the term 
                        `applicable taxable year' means the taxable 
                        year in which the transfer described in 
                        subparagraph (A)(i) is made to the account of 
                        the designated beneficiary.
                            ``(iv) Excess transfers.--If the total 
                        amount of any transfers made to the account of 
                        a designated beneficiary pursuant to 
                        subparagraph (A)(i) during an applicable 
                        taxable year exceeds the dollar amount under 
                        subparagraph (A)(ii)(I) (after application of 
                        clauses (i) and (ii)) for such taxable year, 
                        the tax imposed by this chapter for such 
                        taxable year shall be increased by the amount 
                        of such excess.
                    ``(D) Distribution of matching funds.--
                            ``(i) In general.--Any distribution under a 
                        Lifelong Learning and Training Account program 
                        made from amounts transferred pursuant to this 
                        paragraph shall be made by the administrator--
                                    ``(I) directly to the program 
                                described in clauses (i) through (iii) 
                                of subsection (e)(5)(A) which provides 
                                training to the designated beneficiary, 
                                or
                                    ``(II) to reimburse the designated 
                                beneficiary for any qualified training 
                                expenditures incurred by such 
                                beneficiary,
                        provided that the beneficiary has provided the 
                        administrator with such documentation as is 
                        deemed necessary to ensure compliance with 
                        clause (ii).
                            ``(ii) Prohibition.--No amounts transferred 
                        pursuant to this paragraph to any account of a 
                        designated beneficiary under a Lifelong 
                        Learning and Training Account program may be 
                        distributed for any purpose other than for 
                        payment or reimbursement of qualified training 
                        expenditures.
                    ``(E) Additional reduction for non-qualified 
                distributions.--For purposes of any amount of a 
                distribution under a Lifelong Learning and Training 
                Account program which is includible in the gross income 
                of the designated beneficiary, any available funds in 
                the account of such beneficiary which were transferred 
                pursuant to this paragraph (and any earnings thereon) 
                shall also be reduced by such amount.
                    ``(F) Rescission of matching funds.--On January 1 
                of the applicable calendar year, any available funds in 
                the account of such beneficiary which were transferred 
                pursuant to this paragraph (and any earnings thereon) 
                shall be reduced to zero.
            ``(5) Investment.--
                    ``(A) In general.--Any contributions or transfers 
                to a Lifelong Learning and Training Account program 
                (and any earnings thereon) shall be invested by the 
                administrator in United States Treasury securities with 
                a maturity date of not greater than 10 years.
                    ``(B) Secretarial authority.--The Secretary may 
                prescribe such regulations, rules, or other guidance as 
                may be necessary or appropriate for purposes of 
                applying this paragraph.
            ``(6) Required distributions.--On January 1 of the 
        applicable calendar year, the total amount of available funds 
        in the account of the designated beneficiary which were 
        contributed by the designated beneficiary or their employer 
        (and any earnings thereon) shall be distributed to such 
        beneficiary.
    ``(c) Tax Treatment.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, no amount shall be includible in gross income of--
                    ``(A) a designated beneficiary under a Lifelong 
                Learning and Training Account program, or
                    ``(B) an employer of such beneficiary that 
                contributes to such program on behalf of such 
                beneficiary,
        with respect to any distribution or earnings under such 
        program.
            ``(2) Distributions.--
                    ``(A) In general.--Any distribution under a 
                Lifelong Learning and Training Account program shall be 
                includible in the gross income of the distributee in 
                the manner as provided under section 72 to the extent 
                not excluded from gross income under any other 
                provision of this chapter.
                    ``(B) Distributions for qualified training 
                expenditures.--
                            ``(i) In general.--In the case of any 
                        distributions, if such distributions do not 
                        exceed the qualified training expenditures of 
                        the designated beneficiary, no amount shall be 
                        includible in gross income.
                            ``(ii) Coordination with other credits.--
                        For purposes of determining the credit allowed 
                        under section 25A, no distribution under a 
                        Lifelong Learning and Training Account program 
                        shall be included as qualified tuition and 
                        related expenses under such section.
                    ``(C) Change in beneficiaries or programs.--
                            ``(i) Rollovers.--Subparagraph (A) shall 
                        not apply to that portion of any distribution 
                        which, within 60 days of such distribution, is 
                        transferred--
                                    ``(I) to another Lifelong Learning 
                                and Training Account program for the 
                                benefit of the designated beneficiary, 
                                or
                                    ``(II) to the credit of another 
                                designated beneficiary under a Lifelong 
                                Learning and Training Account program 
                                who is a member of the family of the 
                                designated beneficiary with respect to 
                                which the distribution was made.
                            ``(ii) Change in designated 
                        beneficiaries.--Any change in the designated 
                        beneficiary of an interest in a Lifelong 
                        Learning and Training Account program shall not 
                        be treated as a distribution for purposes of 
                        subparagraph (A) if the new beneficiary is a 
                        member of the family of the old beneficiary.
                            ``(iii) Limitation on certain rollovers.--
                        Clause (i)(I) shall not apply to any transfer 
                        if such transfer occurs within 12 months from 
                        the date of a previous transfer to any Lifelong 
                        Learning and Training Account program for the 
                        benefit of the designated beneficiary.
                            ``(iv) Matching funds forfeited.--In the 
                        case of any transfer described in clause 
                        (i)(II) or any change in the designated 
                        beneficiary of an interest in a Lifelong 
                        Learning and Training Account program (with the 
                        exception of any change due to the death of the 
                        old beneficiary), any amounts transferred to 
                        the account of the designated beneficiary under 
                        subsection (b)(4), and any earnings thereon, 
                        shall be reduced (but not below zero) by an 
                        amount equal to the total amount transferred to 
                        any account of any other beneficiary.
                    ``(D) Special rule for contributions of refunded 
                amounts.--In the case of a beneficiary who receives a 
                refund of any qualified training expenditures from any 
                program described in clauses (i) through (iii) of 
                subsection (e)(5)(A), subparagraph (A) shall not apply 
                to that portion of any distribution for the taxable 
                year which is recontributed to a Lifelong Learning and 
                Training Account program of which such individual is a 
                beneficiary, but only to the extent such recontribution 
                is made not later than 60 days after the date of such 
                refund and does not exceed the refunded amount.
            ``(3) Estate tax treatment.--
                    ``(A) In general.--No amount shall be includible in 
                the gross estate of any individual for purposes of 
                chapter 11 by reason of an interest in a Lifelong 
                Learning and Training Account program.
                    ``(B) Amounts includible in estate of designated 
                beneficiary in certain cases.--Subparagraph (A) shall 
                not apply to amounts distributed on account of the 
                death of a beneficiary.
            ``(4) Other gift tax rules.--For purposes of chapters 12 
        and 13--
                    ``(A) Treatment of distributions.--Except as 
                provided in subparagraph (B), in no event shall a 
                distribution from a Lifelong Learning and Training 
                Account program be treated as a taxable gift.
                    ``(B) Treatment of designation of new 
                beneficiary.--The taxes imposed by chapters 12 and 13 
                shall apply to a transfer by reason of a change in the 
                designated beneficiary under the program (or a rollover 
                to the account of a new beneficiary) unless the new 
                beneficiary is--
                            ``(i) assigned to the same generation as 
                        (or a higher generation than) the old 
                        beneficiary (determined in accordance with 
                        section 2651), and
                            ``(ii) a member of the family of the old 
                        beneficiary.
            ``(5) Additional tax.--The tax imposed by section 530(d)(4) 
        shall apply to any payment or distribution from a Lifelong 
        Learning and Training Account program in the same manner as 
        such tax applies to a payment or distribution from a Coverdell 
        education savings account.
    ``(d) Reports.--Each officer or employee having control of the 
Lifelong Learning and Training Account program or their designee shall 
make such reports regarding such program to the Secretary and to 
designated beneficiaries with respect to contributions, transfers, 
distributions, and such other matters as the Secretary may require. The 
reports required by this subsection shall be filed at such time and in 
such manner and furnished to such individuals at such time and in such 
manner as may be required by the Secretary.
    ``(e) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Administrator.--The term `administrator' means the 
        entity which established the Lifelong Learning and Training 
        Account program and maintains such program, as described in 
        subsection (b)(1).
            ``(2) Applicable calendar year.--The term `applicable 
        calendar year' means the calendar year beginning after the date 
        on which a designated beneficiary attained 60 years of age.
            ``(3) Designated beneficiary.--The term `designated 
        beneficiary' means--
                    ``(A) the individual designated at the commencement 
                of participation in the Lifelong Learning and Training 
                Account program as the beneficiary of amounts paid (or 
                to be paid) to the program, or
                    ``(B) in the case of a change in beneficiaries 
                described in subsection (c)(2)(C), the individual who 
                is the new beneficiary.
            ``(4) Member of family.--The term `member of the family' 
        means an individual--
                    ``(A) who has attained 25 years of age, and
                    ``(B) who is, with respect to any designated 
                beneficiary--
                            ``(i) the spouse of such beneficiary,
                            ``(ii) an individual who bears a 
                        relationship to such beneficiary which is 
                        described in subparagraphs (A) through (G) of 
                        section 152(d)(2),
                            ``(iii) the spouse of any individual 
                        described in clause (ii), or
                            ``(iv) any first cousin of such 
                        beneficiary.
            ``(5) Qualified training expenditures.--
                    ``(A) In general.--The term `qualified training 
                expenditures' means any expenditures for training which 
                results in the attainment of a recognized postsecondary 
                credential and which is provided through--
                            ``(i) a program of training services which 
                        is listed under section 122(d) of the Workforce 
                        Innovation and Opportunity Act (29 U.S.C. 
                        3152(d)),
                            ``(ii) a program which is conducted by an 
                        area career and technical education school, a 
                        community college, or a labor organization, or
                            ``(iii) a program which is sponsored and 
                        administered by an industry trade association, 
                        industry or sector partnership, or labor 
                        organization.
                    ``(B) Related definitions.--For purposes of 
                subparagraph (A)--
                            ``(i) Area career and technical education 
                        school.--The term `area career and technical 
                        education school' means such a school, as 
                        defined in section 3 of the Carl D. Perkins 
                        Career and Technical Education Act of 2006 (20 
                        U.S.C. 2302), which participates in a program 
                        under that Act (20 U.S.C. 2301 et seq.).
                            ``(ii) Community college.--The term 
                        `community college' means an institution 
                        which--
                                    ``(I) is a junior or community 
                                college as defined in section 312(f) of 
                                the Higher Education Act of 1965 (20 
                                U.S.C. 1058(f)), except that the 
                                institution need not meet the 
                                requirements of paragraph (1) of that 
                                section; and
                                    ``(II) participates in a program 
                                under title IV of that Act (20 U.S.C. 
                                1070 et seq.).
                            ``(iii) Industry or sector partnership.--
                        The term `industry or sector partnership' has 
                        the meaning given such term under section 3 of 
                        the Workforce Innovation and Opportunity Act 
                        (29 U.S.C. 3102).
                            ``(iv) Industry trade association.--The 
                        term `industry trade association' means an 
                        organization which--
                                    ``(I) is described in paragraph (3) 
                                or (6) of section 501(c) and exempt 
                                from taxation under section 501(a); and
                                    ``(II) is representing an industry.
                            ``(v) Labor organization.--The term `labor 
                        organization' means a labor organization, 
                        within the meaning of the term in section 
                        501(c)(5).
                            ``(vi) Recognized postsecondary 
                        credential.--The term `recognized postsecondary 
                        credential' means a credential consisting of an 
                        industry-recognized certificate or 
                        certification, a license recognized by the 
                        State involved or Federal Government, or an 
                        associate or baccalaureate degree.
                    ``(C) Exclusion.--The term `qualified training 
                expenditures' shall not include any amounts paid for 
                meals, lodging, transportation, or other services 
                incidental to any training described in subparagraph 
                (A).
            ``(6) Application of section 514.--An interest in a 
        Lifelong Learning and Training Account program shall not be 
        treated as debt for purposes of section 514.
    ``(f) Public Awareness.--
            ``(1) In general.--The Secretary shall conduct a public 
        information campaign, utilizing paid advertising, to inform the 
        public of the availability of Lifelong Learning and Training 
        Account programs.
            ``(2) Authorization of appropriations.--
                    ``(A) In general.--There is authorized to be 
                appropriated such sums as are necessary to carry out 
                this subsection.
                    ``(B) Availability.--Any sums appropriated under 
                the authorization contained in this subsection shall 
                remain available, without fiscal year limitation, until 
                expended.
    ``(g) Regulations.--Notwithstanding any other provision of this 
section, the Secretary shall prescribe such regulations as may be 
necessary or appropriate to carry out the purposes of this section and 
to prevent abuse of such purposes, including regulations under chapters 
11, 12, and 13 of this title.''.
    (b) Conforming Amendments.--
            (1) Section 135(d)(2)(B) of the Internal Revenue Code of 
        1986 is amended by striking ``sections 529(c)(3)(B) and 
        530(d)(2)'' and inserting ``sections 529(c)(3)(B), 530(d)(2), 
        and 530A(c)(2)(B)''.
            (2) The table of sections for part VIII of subchapter F of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        inserting after the item relating to section 530 the following 
        new item:

``Sec. 530A. Lifelong Learning and Training Account programs.''.
    (c) Administration Assistance.--
            (1) In general.--The Secretary of the Treasury, or the 
        Secretary's delegate (referred to in this paragraph as the 
        ``Secretary''), shall make a grant, in such amount as the 
        Secretary determines appropriate, to each State or agency or 
        instrumentality thereof that has established and maintains a 
        Lifelong Learning and Training Account program under section 
        530A of the Internal Revenue Code of 1986 (as added by 
        subsection (a)), for purposes of administering such program.
            (2) Authorization of appropriations.--There are authorized 
        to be appropriated such sums as may be necessary to carry out 
        the purposes of this subsection.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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