I

104TH CONGRESS

2D SESSION H. R. 4334

To amend the Internal Revenue Code of 1986 to allow individual retirement

accounts to be used for expenses for post-secondary education and job

retraining.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 30, 1996

Mr. SMITH of Texas (for himself, Mr. ROHRABACHER, Mr. BEREUTER, Mr.

BLUTE, and Mr. FLAKE) introduced the following bill; which was referred

to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow individual retirement accounts to be used for expenses for

post-secondary education and job retraining.

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 ‘‘Lifetime Education

5 and Retraining Needs Act’’.
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1 SEC. 2. EXCLUSION FROM GROSS INCOME OF IRA DIS2 TRIBUTIONS USED FOR POST-SECONDARY

3 EDUCATION AND WORKER RETRAINING.

4 (a) IN GENERAL.—Subsection (d) of section 408 of

5 the Internal Revenue Code of 1986 is amended by adding

6 at the end the following new paragraph:

7 ‘‘(8) DISTRIBUTIONS FROM AN INDIVIDUAL RE8 TIREMENT ACCOUNT USED FOR QUALIFIED HIGHER

9 EDUCATION OR WORKER RETRAINING EXPENSES.—

10 ‘‘(A) IN GENERAL.—Paragraph (1) shall

11 not apply to any amount paid or distributed out

12 of an individual retirement account which but

13 for this paragraph would be included in gross

14 income to the extent that such amount does not

15 exceed the sum of the amount of qualified high16 er education expenses and the qualified job re17 training expenses paid during the taxable year.

18 ‘‘(B) DEFINITIONS.—For the purposes of

19 subparagraph (A)—

20 ‘‘(i) QUALIFIED HIGHER EDUCATION

21 EXPENSES.—

22 ‘‘(I) IN GENERAL.—The term

23 ‘qualified higher education expenses’

24 means tuition, fees, books, supplies,

25 and equipment required for the enroll26 ment or attendance of an eligible indi-
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1 vidual at an eligible educational insti2 tution (as defined in section

3 135(c)(3)).

4 ‘‘(II) COORDINATION WITH SAV5 INGS BOND PROVISIONS.—The

6 amount of qualified higher education

7 expenses for any taxable year shall be

8 reduced by any amount excludable

9 from gross income under section 135.

10 ‘‘(ii) JOB RETRAINING EXPENSES.—

11 The term ‘job retraining expenses’ means

12 tuition, fees, books, supplies, and equip13 ment required for the enrollment or at14 tendance of an eligible individual in a

15 State-accredited job retraining program.

16 ‘‘(iii) ELIGIBLE INDIVIDUAL.—The

17 term ‘eligible individual’ means—

18 ‘‘(I) the taxpayer,

19 ‘‘(II) the taxpayer’s spouse, and

20 ‘‘(III) the taxpayer’s child (as de21 fined in section 151(c)(3)).’’

22 (b) EXCESS DISTRIBUTIONS TAX NOT TO APPLY.—

23 Paragraph (2) of section 4980A(c) of such Code is amend24 ed by inserting after subparagraph (F) the following new

25 subparagraph:
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1 ‘‘(G) Any retirement distribution to the ex2 tent not included in gross income by reason of

3 section 408(d)(8).’’

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

5 this section shall apply to payments and distributions

6 made after December 31, 1996.

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