I 
111TH CONGRESS 
2D SESSION 
H. R. 5715 
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 
JULY 13, 2010 
Mr. LARSON of Connecticut (for himself, Mr. ROSKAM, Mr. POLIS of Colorado, 
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 Labor, 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 2010’’. 
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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 2010 and before 
2015, and 
‘‘(II) $1,500 in the case of tax-
able years beginning after 2014. 
‘‘(C) COST-OF-LIVING ADJUSTMENT.— 
‘‘(i) IN GENERAL.—In the case of any 
taxable year beginning in a calendar year 
after 2014, 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 2013’ 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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ployer of the account beneficiary to the extent 
that the aggregate amount of such contribu-
tions made during the taxable year does not ex-
ceed the limitation in effect under paragraph 
(1) (determined without regard to subpara-
graph (B) of this paragraph) for such taxable 
year with respect to such beneficiary. 
‘‘(B) COORDINATION WITH CREDIT.—The 
limitation which would (but for this subpara-
graph) apply under paragraph (1) with respect 
to the eligible individual for any taxable year 
shall be reduced (but not below zero) by the ag-
gregate amount contributed to lifelong learning 
accounts of such individual which is excludable 
from the taxpayer’s gross income for such tax-
able year under subparagraph (A) (and such 
amount shall not be taken into account in de-
termining the credit under subsection (a)). 
‘‘(4) APPLICABLE PERCENTAGE.—For purposes 
of this section, the term ‘applicable percentage’ 
means— 
‘‘(A) 50 percent with respect to the first 
$500 of contributions taken into account under 
subsection (a) with respect to any eligible indi-
vidual for any taxable year, and 
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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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than the 60th day after the day on which the 
beneficiary receives the payment or distribution. 
‘‘(B) LIMITATION.—This paragraph shall 
not apply to any amount described in subpara-
graph (A) received by an individual from a life-
long learning account if, at any time during the 
1-year period ending on the day of such receipt, 
such individual received any other amount de-
scribed in subparagraph (A) from a lifelong 
learning account to which paragraphs (1) and 
(2) did not apply by reason of the application 
of this paragraph. 
‘‘(6) TRANSFER OF ACCOUNT INCIDENT TO DI-
VORCE.—The transfer of an individual’s interest in 
a lifelong learning account to an individual’s spouse 
or former spouse under a divorce or separation in-
strument described in subparagraph (A) of section 
71(b)(2) shall not be considered a taxable transfer 
made by such individual notwithstanding any other 
provision of this subtitle, and such interest shall, 
after such transfer, be treated as a lifelong learning 
account with respect to which such spouse is the ac-
count beneficiary. 
‘‘(7) TREATMENT AFTER DEATH OF ACCOUNT 
BENEFICIARY.— 
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