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 life-
long 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 Com-
mittee on Ways and Means, and in addition to the Committee on Edu-
cation and the Workforce, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall with-
in 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Lifelong Learning Ac-
counts Act of 2011’’. 
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SEC. 2. LIFELONG LEARNING ACCOUNTS. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to refundable credits) is amended by insert-
ing after section 36C the following new section: 
‘‘SEC. 36D. CONTRIBUTIONS TO LIFELONG LEARNING AC-
COUNTS. 
‘‘(a) CREDIT ALLOWED.—In the case of an eligible 
individual, there shall be allowed as a credit against the 
tax imposed by this subtitle for the taxable year an 
amount equal to the applicable percentage of the contribu-
tions (other than rollover contributions described in sub-
section (e)(5)) paid in cash during such taxable year by 
or on behalf of such individual to a lifelong learning ac-
count of such individual. 
‘‘(b) LIMITATIONS AND DEFINITIONS RELATED TO 
ALLOWANCE OF CREDIT.— 
‘‘(1) DOLLAR LIMITATION.— 
‘‘(A) IN GENERAL.—The amount of con-
tributions taken into account under subsection 
(a) with respect to any eligible individual for 
any taxable year shall not exceed the lesser of— 
‘‘(i) $2,500, or 
‘‘(ii) an amount equal to the com-
pensation (as defined in section 219(f)(1)) 
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includible in the individual’s gross income 
for such taxable year. 
‘‘(B) CATCH-UP CONTRIBUTIONS FOR INDI-
VIDUALS 50 OR OLDER.— 
‘‘(i) IN GENERAL.—In the case of an 
individual who has attained the age of 50 
before the close of the taxable year, the 
dollar limitation otherwise applicable under 
subparagraph (A)(i) (without regard to 
paragraph (2)) for such taxable year shall 
be increased by— 
‘‘(I) $1,000 in the case of taxable 
years beginning after 2011 and before 
2016, and 
‘‘(II) $1,500 in the case of tax-
able years beginning after 2015. 
‘‘(C) COST-OF-LIVING ADJUSTMENT.— 
‘‘(i) IN GENERAL.—In the case of any 
taxable year beginning in a calendar year 
after 2015, the $2,500 amount in subpara-
graph (A) shall be increased by an amount 
equal to— 
‘‘(I) such dollar amount, multi-
plied by 
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‘‘(II) the cost-of-living adjust-
ment determined under section 1(f) 
for the calendar year in which the tax-
able year begins, determined by sub-
stituting ‘calendar year 2014’ for ‘cal-
endar year 1992’ in subparagraph (B) 
thereof. 
‘‘(ii) 
ROUNDING
RULES.—If 
any 
amount after adjustment under clause (i) 
is not a multiple of $100, such amount 
shall be rounded to the next lower multiple 
of $100. 
‘‘(2) LIMITATIONS
BASED
ON
MODIFIED
AD-
JUSTED GROSS INCOME.— 
‘‘(A) IN GENERAL.—The dollar amount ap-
plicable under paragraph (1) for any taxable 
year (without regard to this paragraph) shall be 
reduced (but not below zero) by the reduction 
amount. 
‘‘(B) REDUCTION AMOUNT.—For purposes 
of subparagraph (A), the reduction amount is 
the amount which bears the same ratio to the 
dollar amount applicable under paragraph (1) 
for any taxable year (without regard to this 
paragraph) as— 
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‘‘(i) the excess of— 
‘‘(I) the account beneficiary’s 
modified adjusted gross income for 
such taxable year, over 
‘‘(II) 
$100,000 
(twice 
such 
amount in the case of a joint return), 
bears to 
‘‘(ii) $20,000 (twice such amount in 
the case of a joint return). 
For purposes of the preceding sentence, the 
term ‘modified adjusted gross income’ means 
adjusted gross income increased by any amount 
excluded from gross income under section 911, 
931, or 933. 
‘‘(C) SPECIAL RULE FOR MARRIED INDI-
VIDUALS FILING A SEPARATE RETURN.—In the 
case of a married individual filing a separate re-
turn, subparagraph (B)(i)(II) shall be applied 
by substituting ‘zero’ for the dollar amount 
therein. 
‘‘(3) TREATMENT
OF
EMPLOYER
CONTRIBU-
TIONS.— 
‘‘(A) EXCLUSION FROM GROSS INCOME.— 
Gross income shall not include any contribution 
to a lifelong learning account made by an em-
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‘‘(B) 25 percent with respect to so much of 
such contributions as exceeds $500. 
‘‘(5) ELIGIBLE INDIVIDUAL.—For purposes of 
this section, the term ‘eligible individual’ means any 
individual for any taxable year if, as of the first day 
of such taxable year, such individual has attained 
age 18 but has not attained age 71. 
‘‘(c) LIFELONG LEARNING ACCOUNTS.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—The term ‘lifelong learning 
account’ means a trust created or organized in the 
United States as a lifelong learning account exclu-
sively for the purpose of paying the qualified edu-
cation expenses of the account beneficiary, but only 
if the written governing instrument creating the 
trust meets the following requirements: 
‘‘(A) No contribution will be accepted un-
less it is in cash. 
‘‘(B) Except in the case of a rollover con-
tribution described in subsection (e)(5), no con-
tribution will be accepted if such contribution, 
when added to all previous contributions to the 
trust for the calendar year, would exceed the 
dollar amount applicable to the account bene-
ficiary under subsection (b). 
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‘‘(C) The trustee is a bank (as defined in 
section 408(n)), an agency or instrumentality of 
a State, or another person who demonstrates to 
the satisfaction of the Secretary that the man-
ner in which that person will administer the 
trust will be consistent with the requirements of 
this section. 
‘‘(D) No part of the trust assets will be in-
vested in life insurance contracts. 
‘‘(E) No part of the trust assets will be in-
vested in any collectible (as defined in section 
408(m)). 
‘‘(F) The assets of the trust will not be 
commingled with other property except in a 
common trust fund or common investment 
fund. 
‘‘(G) The interest of an individual in the 
balance in his account is nonforfeitable. 
‘‘(2) QUALIFIED EDUCATION EXPENSES.—The 
term ‘qualified education expenses’ means amounts 
paid by the account beneficiary for education of, or 
courses of instruction (including training and ap-
prenticeship programs) for, the account beneficiary, 
including— 
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‘‘(A) tuition, fees, and similar payments, 
and 
‘‘(B) books, supplies, equipment, tools, and 
information technology devices, required for 
such course or education. 
Such term shall not include amounts paid for any 
course or other education involving sports, games, or 
hobbies. 
‘‘(3) ACCOUNT
BENEFICIARY.—The term ‘ac-
count beneficiary’ means the individual on whose be-
half the lifelong learning account was established. 
‘‘(4) CERTAIN RULES TO APPLY.—Rules similar 
to the following rules shall apply for purposes of this 
section: 
‘‘(A) Section 219(f)(3) (relating to time 
when contributions deemed made). 
‘‘(B) Section 408(g) (relating to commu-
nity property laws). 
‘‘(C) Section 408(h) (relating to custodial 
accounts). 
‘‘(d) TAX TREATMENT OF ACCOUNTS.— 
‘‘(1) IN GENERAL.—A lifelong learning account 
is exempt from taxation under this subtitle unless 
such account has ceased to be a lifelong learning ac-
count. Notwithstanding the preceding sentence, any 
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such account is subject to the taxes imposed by sec-
tion 511 (relating to imposition of tax on unrelated 
business income of charitable, etc. organizations). 
‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 
to the rules of paragraphs (2) and (4) of section 
408(e) shall apply to lifelong learning accounts, and 
any amount treated as distributed under such rules 
shall be treated as not used to pay qualified edu-
cation expenses. 
‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) INCLUSION
IN
GROSS
INCOME.—Any 
amount distributed out of a lifelong learning account 
shall be included in gross income by the distributee. 
‘‘(2) ADDITIONAL TAX.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided in this subsection, the tax imposed by 
this chapter on the account beneficiary for any 
taxable year in which there is a nonqualified 
distribution from a lifelong learning account 
shall be increased by 10 percent of the amount 
of such distribution. 
‘‘(B) 
EXCEPTIONS.—Subparagraph 
(A) 
shall not apply if the distribution is made after 
the account beneficiary dies, becomes disabled 
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(within the meaning of section 72(m)(7)), or 
has attained age 70. 
‘‘(3) NONQUALIFIED DISTRIBUTION.—For pur-
poses of this section, the term ‘nonqualified distribu-
tion’ means the excess (if any) of— 
‘‘(A) the aggregate distributions from the 
account during the taxable year, over 
‘‘(B) the qualified education expenses of 
the account beneficiary for the taxable year. 
‘‘(4) EXCESS CONTRIBUTIONS RETURNED BE-
FORE DUE DATE OF RETURN.— 
‘‘(A) IN
GENERAL.—If any excess con-
tribution is contributed for a taxable year to 
any lifelong learning account of an individual, 
paragraphs (1) and (2) shall not apply to dis-
tributions from the lifelong learning accounts of 
such individual (to the extent such distributions 
do not exceed the aggregate excess contribu-
tions to all such accounts of such individual for 
such year) if— 
‘‘(i) such distribution is received by 
the individual on or before the last day 
prescribed by law (including extensions of 
time) for filing such individual’s return for 
such taxable year, and 
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‘‘(ii) such distribution is accompanied 
by the amount of net income attributable 
to such excess contribution. 
Any net income described in clause (ii) shall be 
included in the gross income of the individual 
for the taxable year in which it is received. 
‘‘(B) EXCESS
CONTRIBUTION.—For pur-
poses of subparagraph (A), the term ‘excess 
contribution’ means any contribution (other 
than a rollover contribution described in para-
graph (5)) which is not taken into account for 
purposes of determining the credit allowed 
under subsection (a) or the amount excludable 
from the taxpayer’s gross income under sub-
section (b)(3). 
‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 
described in this paragraph as a rollover contribu-
tion if it meets the requirements of subparagraphs 
(A) and (B). 
‘‘(A) IN GENERAL.—Paragraphs (1) and 
(2) shall not apply to any amount paid or dis-
tributed from a lifelong learning account to the 
account beneficiary to the extent the amount 
received is paid into a lifelong learning account 
for the benefit of such beneficiary not later 
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which includes such date, or if such 
person is the estate of such bene-
ficiary, in such beneficiary’s gross in-
come for the last taxable year of such 
beneficiary. 
‘‘(ii) 
DEDUCTION
FOR
ESTATE 
TAXES.—An appropriate deduction shall be 
allowed under section 691(c) to any person 
(other than the decedent or the decedent’s 
spouse) with respect to amounts included 
in gross income under clause (i) by such 
person. 
‘‘(f) REPORTS.—The trustee of a lifelong learning ac-
count shall make such reports regarding such account to 
the Secretary and to the account beneficiary with respect 
to contributions, distributions, and such other matters as 
the Secretary may require under regulations. 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 those reg-
ulations.’’. 
(b) TAX ON EXCESS CONTRIBUTIONS.—Section 4973 
of the Internal Revenue Code of 1986 is amended— 
(1) by striking ‘‘or’’ at the end of subsection 
(a)(4), by inserting ‘‘or’’ at the end of subsection 
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(a)(5), and by inserting after subsection (a)(5) the 
following new paragraph: 
‘‘(6) a lifelong learning account (within the 
meaning of section 36D(c)),’’, and 
(2) by adding at the end the following new sub-
section: 
‘‘(h) EXCESS CONTRIBUTIONS TO LIFELONG LEARN-
ING ACCOUNTS.—For purposes of this section, in the case 
of lifelong learning accounts (within the meaning of sec-
tion 36D(c)), the term ‘excess contributions’ means the 
sum of— 
‘‘(1) the aggregate amount contributed for the 
taxable year to the accounts (other than rollover 
contributions described in section 36D(e)(5)) which 
is not taken into account for purposes of deter-
mining the credit allowed under section 36D(a) or 
the amount excludable from the taxpayer’s gross in-
come under section 36D(b)(3), and 
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by 
the sum of— 
‘‘(A) the distributions out of the accounts 
with respect to which additional tax was im-
posed under section 36D(e)(2)(A) for the tax-
able year, and 
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‘‘(B) the excess (if any) of— 
‘‘(i) the maximum amount of con-
tributions which may be taken into account 
under section 36D(a) for the taxable year, 
over 
‘‘(ii) the amount contributed to the 
accounts for the taxable year. 
For purposes of this subsection, any contribu-
tion which is distributed out of the lifelong 
learning account in a distribution to which sec-
tion 36D(e)(4) applies shall be treated as an 
amount not contributed.’’. 
(c) TAX ON PROHIBITED TRANSACTIONS.— 
(1) Paragraph (1) of section 4975(e) of the In-
ternal Revenue Code of 1986 (relating to prohibited 
transactions) is amended by redesignating subpara-
graph (G) as subparagraph (H), by striking ‘‘or’’ at 
the end of subparagraph (F), and by inserting after 
subparagraph (F) the following new subparagraph: 
‘‘(G) a lifelong learning account described 
in section 36D(c), or’’. 
(2) Subsection (c) of section 4975 of such Code 
is amended by adding at the end the following new 
paragraph: 
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‘‘(7) SPECIAL RULE FOR LIFELONG LEARNING 
ACCOUNTS.—An individual for whose benefit a life-
long learning account is established shall be exempt 
from the tax imposed by this section with respect to 
any transaction concerning such account (which 
would otherwise be taxable under this section) if, 
with respect to such transaction, the account ceases 
to be a lifelong learning account by reason of the ap-
plication of section 36D(d)(2) to such account.’’. 
(d) FAILURE TO PROVIDE REPORTS ON LIFELONG 
LEARNING ACCOUNTS.—Paragraph (2) of section 6693(a) 
of the Internal Revenue Code of 1986 is amended by re-
designating subparagraphs (A) through (E) as subpara-
graphs (B) through (F), respectively, and by inserting be-
fore subparagraph (B) (as so redesignated) the following 
new subparagraph: 
‘‘(A) section 36D(f) (relating to lifelong 
learning accounts),’’. 
(e) EXCLUSION FROM EMPLOYMENT TAXES.— 
(1) 
FEDERAL
INSURANCE
CONTRIBUTIONS 
ACT.—Subsection (a) of section 3121 of the Internal 
Revenue Code of 1986 is amended by striking ‘‘or’’ 
at the end of paragraph (22), by striking the period 
at the end of paragraph (23) and inserting ‘‘; or’’, 
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and by inserting after paragraph (23) the following 
new paragraph: 
‘‘(24) any payment made to or for the benefit 
of an employee if at the time of such payment it is 
reasonable to believe that the employee will be able 
to exclude such payment from income under section 
36D(b)(3).’’. 
(2) RAILROAD RETIREMENT TAX.—Subsection 
(e) of section 3231 of such Code is amended by add-
ing at the end the following new paragraph: 
‘‘(13) LEARNING ACCOUNT CONTRIBUTIONS.— 
The term ‘compensation’ shall not include any pay-
ment made to or for the benefit of an employee if 
at the time of such payment it is reasonable to be-
lieve that the employee will be able to exclude such 
payment from income under section 36D(b)(3).’’. 
(3) UNEMPLOYMENT TAX.—Subsection (b) of 
section 3306 of such Code is amended by striking 
‘‘or’’ at the end of paragraph (19), by striking the 
period at the end of paragraph (20) and inserting ‘‘; 
or’’, and by inserting after paragraph (20) the fol-
lowing new paragraph: 
‘‘(21) any payment made to or for the benefit 
of an employee if at the time of such payment it is 
reasonable to believe that the employee will be able 
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to exclude such payment from income under section 
36D(b)(3).’’. 
(4) WITHHOLDING TAX.—Subsection (a) of sec-
tion 3401 of such Code is amended by striking ‘‘or’’ 
at the end of paragraph (22), by striking the period 
at the end of paragraph (23) and inserting ‘‘; or’’, 
and by inserting after paragraph (23) the following 
new paragraph: 
‘‘(24) any payment made to or for the benefit 
of an employee if at the time of such payment it is 
reasonable to believe that the employee will be able 
to exclude such payment from income under section 
36D(b)(3).’’. 
(5) EMPLOYER CONTRIBUTIONS REQUIRED TO 
BE SHOWN ON W–2.—Subsection (a) of section 6051 
of such Code is amended by striking ‘‘and’’ at the 
end of paragraph (13), by striking the period at the 
end of paragraph (14) and inserting ‘‘, and’’, and by 
inserting after paragraph (14) the following new 
paragraph: 
‘‘(15) the amount contributed to any lifelong 
learning account (as defined in section 36D) on be-
half of such employee.’’. 
(6) SOCIAL
SECURITY
TRUST
FUNDS
HELD 
HARMLESS.—There is hereby appropriated (out of 
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any money in the Treasury not otherwise appro-
priated) for each fiscal year to each fund under the 
Social Security Act an amount equal to the reduc-
tion in the transfers to such fund for such fiscal 
year by reason of the amendment made by para-
graph (1). 
(f) EXEMPTION FROM ERISA REQUIREMENTS.— 
Subsection (b) of section 4 of the Employee Retirement 
Income Security Act of 1974 is amended by striking ‘‘or’’ 
at the end of paragraph (4), by striking the period at the 
end of paragraph (5) and inserting ‘‘; or’’, and by insert-
ing after paragraph (5) the following new paragraph: 
‘‘(6) such plan is maintained solely for the pur-
poses of establishing, and making contributions to, 
lifelong learning accounts (as defined in section 36D 
of the Internal Revenue Code of 1986) on behalf of 
employees.’’. 
(g) CONFORMING AMENDMENTS.— 
(1) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by inserting after the 
item relating to section 36C the following new item: 
‘‘Sec. 36D. Contributions to lifelong learning accounts.’’. 
(2) Section 6211(b)(4)(A) of such Code is 
amended by inserting ‘‘36D,’’ after ‘‘36C,’’. 
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(3) Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting ‘‘36D,’’ after 
‘‘36C,’’. 
(h) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 3. CREDIT FOR EMPLOYER CONTRIBUTIONS TO LIFE-
LONG LEARNING ACCOUNTS AND ADMINIS-
TRATIVE EXPENSES OF CERTAIN SMALL EM-
PLOYERS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to business related credits) is amended by 
adding at the end the following new section: 
‘‘SEC. 45S. LIFELONG LEARNING ACCOUNTS CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 38, the 
lifelong learning accounts credit is the sum of— 
‘‘(1) the lifelong learning account contributions 
credit, and 
‘‘(2) in the case of an eligible employer, the 
small employer lifelong learning account administra-
tive costs credit. 
‘‘(b) LIFELONG LEARNING ACCOUNT CONTRIBU-
TIONS CREDIT.— 
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‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘lifelong learning account contribu-
tions credit’ means the amount equal to 25 percent 
of the aggregate amount paid or incurred by the tax-
payer during the taxable year as contributions to 
lifelong learning accounts (as defined in section 
36D) of employees of the taxpayer. 
‘‘(2) DOLLAR LIMITATION.—The amount of the 
contributions taken into account under paragraph 
(1) with respect to any employee for any taxable 
year shall not exceed $2,500. 
‘‘(c) SMALL EMPLOYER LIFELONG LEARNING AC-
COUNT ADMINISTRATIVE COSTS CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘small employer lifelong learning ac-
count administrative costs credit’ means, in the case 
of an eligible employer, the amount equal to 50 per-
cent of the aggregate amount paid or incurred by 
the taxpayer during the taxable year as administra-
tive expenses in carrying out a program to make 
payments to the lifelong learning accounts (as de-
fined in section 36D) of employees of the taxpayer. 
‘‘(2) DOLLAR LIMITATION.—The amount of the 
credit determined under this subsection for any tax-
able year shall not exceed— 
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‘‘(A) $500 for the first credit year and 
each of the 2 taxable years immediately fol-
lowing the first credit year, and 
‘‘(B) zero for any other taxable year. 
‘‘(3) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) ELIGIBLE EMPLOYER.—The term ‘eli-
gible employer’ has the meaning given such 
term by section 408(p)(2)(C)(i). 
‘‘(B) FIRST
CREDIT
YEAR.—The term 
‘first credit year’ means the first taxable year 
for which the taxpayer claims a credit under 
this section. 
‘‘(4) SPECIAL
RULES.—For purposes of this 
subsection, rules similar to the rules of paragraphs 
(1), (2), and (3) of section 45E(e) shall apply.’’. 
(b) CREDIT PART OF GENERAL BUSINESS CREDIT.— 
Section 38(b) of such Code is amended by striking ‘‘plus’’ 
at the end of paragraph (35), by striking the period at 
the end of paragraph (36) and inserting ‘‘, plus’’, and by 
adding at the end the following new paragraph: 
‘‘(37) the lifelong learning accounts credit de-
termined under section 45S.’’. 
(c) DEDUCTION
FOR
UNUSED
CREDIT.—Section 
196(c) of such Code is amended by striking ‘‘and’’ at the 
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end of paragraph (13), by striking the period at the end 
of paragraph (14) and inserting ‘‘, and’’, and by adding 
at the end the following new paragraph: 
‘‘(15) the lifelong learning accounts credit de-
termined under section 45S.’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 45S. Lifelong learning accounts credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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