long learning account shall be treated as if such 
designated beneficiary were the account bene-
ficiary. 
‘‘(B) OTHER CASES.— 
‘‘(i) IN GENERAL.—If, by reason of 
the death of the account beneficiary, any 
person acquires the account beneficiary’s 
interest in a lifelong learning account in a 
case to which subparagraph (A) does not 
apply— 
‘‘(I) such account shall cease to 
be a lifelong learning account as of 
the date of death, and 
‘‘(II) an amount equal to the fair 
market value of the assets in such ac-
count on such date shall be includible 
if such person is not the estate of 
such beneficiary, in such person’s 
gross income for the taxable year 
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. 
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‘‘(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 
(a)(5), and by inserting after subsection (a)(5) the 
following new paragraph: 
‘‘(6) a lifelong learning account (within the 
meaning of section 36C(c)),’’, and 
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(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 36C(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 36C(e)(5)) which 
is not taken into account for purposes of deter-
mining the credit allowed under section 36C(a) or 
the amount excludable from the taxpayer’s gross in-
come under section 36C(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 36C(e)(2)(A) for the tax-
able year, and 
‘‘(B) the excess (if any) of— 
‘‘(i) the maximum amount of con-
tributions which may be taken into account 
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under section 36C(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 36C(e)(5) 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 36C(c), or’’. 
(2) Subsection (c) of section 4975 of such Code 
is amended by adding at the end the following new 
paragraph: 
‘‘(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 
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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 paragraph (2) or (3) of section 36C(d) 
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 strik-
ing ‘‘and’’ at the end of subparagraph (D), by redesig-
nating subparagraph (E) as subparagraph (F), and by in-
serting after subparagraph (D) the following new subpara-
graph: 
‘‘(E) section 36C(f) (relating to lifelong 
learning accounts), and’’. 
(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’’, 
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 
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SMARTINEZ on DSK6TPTVN1PROD with BILLS
reasonable to believe that the employee will be able 
to exclude such payment from income under section 
36C(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 36C(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 
to exclude such payment from income under section 
36C(b)(3).’’. 
(4) WITHHOLDING TAX.—Subsection (a) of sec-
tion 3401 of such Code is amended by striking ‘‘or’’ 
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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 
36C(b)(3).’’. 
(5) SOCIAL
SECURITY
TRUST
FUNDS
HELD 
HARMLESS.—There is hereby appropriated (out of 
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, 
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SMARTINEZ on DSK6TPTVN1PROD with BILLS
lifelong learning accounts (within the meaning of 
section 36C(c) 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 36B the following new item: 
‘‘Sec. 36C. Contributions to lifelong learning accounts.’’. 
(2) Section 6211(b)(4)(A) of such Code is 
amended by inserting ‘‘36C,’’ after ‘‘36B,’’. 
(3) Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting ‘‘36C,’’ after 
‘‘36B,’’. 
(h) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2013. 
SEC. 6. CREDIT FOR SMALL BUSINESSES WITH RESPECT TO 
LIFELONG LEARNING ACCOUNT PROGRAMS. 
(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: 
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‘‘SEC. 45S. LIFELONG LEARNING ACCOUNTS CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 38, in 
the case of an eligible employer, the lifelong learning ac-
counts credit is the sum of— 
‘‘(1) the lifelong learning account contributions 
credit, and 
‘‘(2) the lifelong learning account administra-
tive costs credit. 
‘‘(b) LIFELONG LEARNING ACCOUNT CONTRIBU-
TIONS CREDIT.— 
‘‘(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 (within the meaning of 
section 36C(c)) 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 $3,000. 
‘‘(c) LIFELONG LEARNING ACCOUNT ADMINISTRA-
TIVE COSTS CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘lifelong learning account administra-
tive costs credit’ means the amount equal to 50 per-
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SMARTINEZ on DSK6TPTVN1PROD with BILLS
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 (within 
the meaning of section 36C(c)) 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— 
‘‘(A) $500 per eligible employer for the 
first credit year and each of the 2 taxable years 
immediately following the first credit year, and 
‘‘(B) zero for any other taxable year. 
‘‘(3) FIRST
CREDIT
YEAR.—For purposes of 
this subsection, 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. 
‘‘(d) ELIGIBLE EMPLOYER.—For purposes of this 
section, the term ‘eligible employer’ has the meaning given 
such term by section 408(p)(2)(C)(I) applied— 
‘‘(1) by substituting ‘250 employees’ for ‘100 
employees’ in subclause (I) thereof, 
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‘‘(2) for purposes of determining eligibility for 
the lifelong learning account contributions credit for 
any taxable year, without regard to subclause (II) 
thereof, and 
‘‘(3) for purposes of determining eligibility for 
the lifelong learning account administrative costs 
credit for any taxable year, by treating the plan de-
scribed in subsection (c)(1) as the plan referred to 
in such subclause (II). 
‘‘(e) RECAPTURE IN CASE OF EMPLOYEE COERCION, 
ETC.—If the Secretary, after consultation with the Sec-
retary of Labor, determines that the taxpayer has re-
quired, coerced, or influenced an employee to establish a 
life long learning account or to use, or refrain from using, 
funds from the account for any eligible education or skill 
development expense (as defined in section 36C)— 
‘‘(1) the tax imposed on the taxpayer under this 
subtitle for the taxable year which includes the date 
of such determination shall be increased by the 
amount of the credits allowed under this section to 
the taxpayer for all taxable years which include any 
portion of the period during which such requirement, 
coercion, or influence occurred, and 
‘‘(2) no credit shall be allowed to the taxpayer 
under this section for the taxable year which in-
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cludes the date of such determination and the suc-
ceeding taxable year.’’. 
(b) CREDIT PART OF GENERAL BUSINESS CREDIT.— 
Section 38(b) of the Internal Revenue Code of 1986 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 the Internal Revenue Code of 1986 is amended 
by striking ‘‘and’’ at the end of paragraph (13), by strik-
ing the period at the end of paragraph (14) and inserting 
‘‘, and’’, and by adding at the end the following new para-
graph: 
‘‘(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 the Internal Revenue Code of 1986 is amended by add-
ing at the end the following new item: 
‘‘Sec. 45S. Lifelong learning accounts credit.’’. 
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(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2013. 
Æ 
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