(i) by striking ‘‘Coverdell education 
savings account’’ and inserting ‘‘Coverdell 
lifelong learning account’’; and 
(ii) by striking ‘‘COVERDELL
EDU-
CATION SAVINGS ACCOUNT’’ in the heading 
and inserting ‘‘COVERDELL
LIFELONG 
LEARNING ACCOUNT’’. 
(D) Section 408A(e)(2)(A)(ii) of such Code 
is amended by striking ‘‘Coverdell education 
savings account’’ and inserting ‘‘Coverdell life-
long learning account’’. 
(E) Section 529(c) of such Code is amend-
ed— 
(i) by striking ‘‘COVERDELL
EDU-
CATION SAVINGS ACCOUNTS’’ in the head-
ing of paragraph (3)(B)(vi) and inserting 
‘‘COVERDELL
LIFELONG
LEARNING
AC-
COUNT’’; and 
(ii) by striking ‘‘an Coverdell edu-
cation savings account’’ in paragraph (6) 
and inserting ‘‘a Coverdell lifelong learning 
account’’. 
(F) Section 877A(e)(2) of such Code is 
amended by striking ‘‘Coverdell education sav-
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ings account’’ and inserting ‘‘Coverdell lifelong 
learning account’’. 
(G) Section 4973 of such Code is amend-
ed— 
(i) by striking ‘‘Coverdell education 
savings account’’ each place it appears in 
subsections (a)(4) and (e)(2)(A) and in-
serting ‘‘Coverdell lifelong learning ac-
count’’; 
(ii) by striking ‘‘Coverdell education 
savings accounts’’ in subsection (e)(1) and 
inserting ‘‘Coverdell lifelong learning ac-
counts’’; and 
(iii) by striking ‘‘COVERDELL EDU-
CATION SAVINGS ACCOUNTS’’ in the head-
ing 
of 
subsection 
(e) 
and 
inserting 
‘‘COVERDELL LIFELONG LEARNING AC-
COUNT’’. 
(H) Section 4975 of such Code is amend-
ed— 
(i) by striking ‘‘Coverdell education 
savings account’’ each place it appears in 
subsections (c)(5) and (e)(1)(F) and in-
serting ‘‘Coverdell lifelong learning ac-
count’’; and 
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(ii) by striking ‘‘COVERDELL
EDU-
CATION SAVINGS ACCOUNTS’’ in the head-
ing of subsection (c)(5) and inserting 
‘‘COVERDELL
LIFELONG
LEARNING
AC-
COUNTS’’. 
(I) Section 6693(a)(2)(F) of such Code is 
amended by striking ‘‘Coverdell education sav-
ings accounts’’ and inserting ‘‘Coverdell lifelong 
learning accounts’’. 
(J) The table of sections for part VIII of 
subchapter F of chapter 1 of such Code is 
amended by striking ‘‘Coverdell education sav-
ings accounts’’ and inserting ‘‘Coverdell lifelong 
learning accounts’’. 
(3) TREATMENT OF EXISTING ACCOUNTS.—For 
purposes of section 530(b)(1) of the Internal Rev-
enue Code of 1986, any account established before 
January 1, 2021, and designated as a Coverdell edu-
cation savings account shall be deemed to have been 
designated as a Coverdell lifelong learning account. 
(b) EXPANDED USE OF ACCOUNTS.— 
(1) ELIGIBLE EXPENSES.— 
(A) IN GENERAL.—Section 530(b)(2)(A) of 
the Internal Revenue Code of 1986 is amended 
by striking ‘‘and’’ at the end of clause (i), by 
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kjohnson on DSK79L0C42PROD with BILLS
striking the period at the end of clause (ii) and 
inserting ‘‘, and’’, and by adding at the end the 
following new clause: 
‘‘(iii) qualified educational or skill de-
velopment expenses (as defined in para-
graph (5)).’’. 
(B) QUALIFIED
EDUCATIONAL
OR
SKILL 
DEVELOPMENT EXPENSES.—Section 530(b) of 
such Code is amended by adding at the end the 
following new paragraph: 
‘‘(5) QUALIFIED EDUCATIONAL OR SKILL DE-
VELOPMENT EXPENSES.—The term ‘qualified edu-
cational or skill development expenses’ means— 
‘‘(A) expenses paid or incurred— 
‘‘(i) after the beneficiary attains age 
16, and 
‘‘(ii) for participation or enrollment of 
the beneficiary in services or activities that 
are— 
‘‘(I) training services described in 
section 134(c)(3)(D) of the Workforce 
Innovation and Opportunity Act (29 
U.S.C. 3174(c)(3)(D)) that are of-
fered by a provider included on the 
list of eligible providers of training 
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services described in section 122 of 
such Act (29 U.S.C. 3152), 
‘‘(II) career and technical edu-
cation activities defined in section 3 of 
the Carl D. Perkins Career and Tech-
nical Education Act of 2006 (20 
U.S.C. 2302) that are offered through 
an eligible institution (as defined in 
such section), 
‘‘(III) career services described in 
clauses (iii), (iv), and (xi) of section 
134(c)(2)(A) of the Workforce Inno-
vation and Opportunity Act (29 
U.S.C. 3174(c)(2)(A)) that are pro-
vided by providers eligible under sec-
tion 134(c)(2)(C) of such Act, 
‘‘(IV) youth activities described 
in section 129(c)(2) of the Workforce 
Innovation and Opportunity Act (29 
U.S.C. 3164(c)(2)) that are provided 
by eligible providers of youth work-
force investment activities under sec-
tion 123 of such Act, or 
‘‘(V) adult education and literacy 
activities, as defined in section 203 of 
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the Adult Education and Family Lit-
eracy Act (29 U.S.C. 3272), that are 
provided by eligible providers of adult 
education and literacy activities under 
section 231 of such Act (29 U.S.C. 
3321), 
‘‘(B) expenses for transportation required 
for or provided by any of the services or activi-
ties described in subparagraph (A), 
‘‘(C) expenses for testing necessary for en-
rollment in, or certification in connection with, 
services or activities described in subparagraph 
(A), or 
‘‘(D) expenses for the purchase of any 
computer software (as defined by section 
197(e)(3)(B)), computer or peripheral equip-
ment (as defined by section 168(i)(2)(B)), fiber 
optic cable related to computer use, internet ac-
cess and related services, if such software, 
equipment, or services are to be used by the 
beneficiary for services or activities described in 
subparagraph (A) during any of the years the 
beneficiary is participating in or enrolled in any 
of the services or activities described in sub-
paragraph (A).’’. 
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Code of 1986 is amended by adding at the end the 
following new section: 
‘‘SEC. 45U. EMPLOYEE EDUCATIONAL SKILLS AND DEVEL-
OPMENT EXPENSES. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
the employee educational skills and development contribu-
tion credit determined under this section for any taxable 
year is 25 percent of the nonelective contributions made 
by the taxpayer during the taxable year to a Coverdell life-
long learning account (as defined in section 530(b)) the 
designated beneficiary of which is an employee of the tax-
payer. 
‘‘(b) SPECIAL RULES AND DEFINITIONS.—For pur-
poses of this section— 
‘‘(1) EMPLOYEE.— 
‘‘(A) CERTAIN EMPLOYEES EXCLUDED.— 
The term ‘employee’ shall not include— 
‘‘(i) an employee within the meaning 
of section 401(c)(1), 
‘‘(ii) any 2-percent shareholder (as de-
fined in section 1372(b)) of an S corpora-
tion, 
‘‘(iii) any 5-percent owner (as defined 
in section 416(i)(1)(B)(i)) of taxpayer, or 
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‘‘(iv) any individual who bears any of 
the relationships described in subpara-
graphs 
(A) 
through 
(G) 
of 
section 
152(d)(2) to, or is a dependent described 
in section 152(d)(2)(H) of, an individual 
described in clause (i), (ii), or (iii). 
‘‘(B) LEASED
EMPLOYEES.—The term 
‘employee’ shall include a leased employee with-
in the meaning of section 414(n). 
‘‘(2) NONELECTIVE CONTRIBUTION.—The term 
‘nonelective contribution’ means an employer con-
tribution other than an employer contribution pursu-
ant to a salary reduction arrangement. 
‘‘(3) AGGREGATION AND OTHER RULES MADE 
APPLICABLE.— 
‘‘(A) AGGREGATION
RULES.—All employ-
ers treated as a single employer under sub-
section (b), (c), (m), or (o) of section 414 shall 
be treated as a single employer for purposes of 
this section. 
‘‘(B) OTHER RULES.—Rules similar to the 
rules of subsections (c), (d), and (e) of section 
52 shall apply.’’. 
(2) CREDIT TREATED AS PART OF GENERAL 
BUSINESS CREDIT.—Section 38(b) of such Code is 
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amended by striking ‘‘plus’’ at the end of paragraph 
(32), by striking the period at the end of paragraph 
(33) and inserting ‘‘, plus’’, and by adding at the 
end the following new paragraph: 
‘‘(34) the employee educational skills and devel-
opment contribution credit determined under section 
45U(a).’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart D of part IV of subchapter A of 
chapter 1 of such Code is amended by adding at the 
end the following new item: 
‘‘Sec. 45U. Employee educational skills and development expenses.’’. 
(e) ALLOWANCE
OF
DEDUCTION
FOR
BENE-
FICIARY.— 
(1) IN GENERAL.—Part VIII of subchapter B 
of chapter 1 of the Internal Revenue Code of 1986 
is amended by redesignating section 224 as section 
225 and by inserting after section 223 the following 
new section: 
‘‘SEC. 224. COVERDELL LIFELONG LEARNING ACCOUNT 
CONTRIBUTIONS. 
‘‘(a) IN GENERAL.—In the case of an individual 
who— 
‘‘(1) is the designated beneficiary of a Coverdell 
lifelong learning account (as defined in section 
530(b)(1)), and 
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‘‘(2) has attained the age of 18 before the close 
of the taxable year, 
there shall be allowed as a deduction an amount equal to 
the contributions for the taxable year by or on behalf of 
such individual to the account described in paragraph (1). 
‘‘(b) RECONTRIBUTED
AMOUNTS.—No deduction 
shall be allowed under this section with respect to a roll-
over contribution described in section 530(d)(5).’’. 
(2) INCREASE IN ADDITIONAL TAX.— 
(A) INCREASE.— 
(i) 
IN
GENERAL.—Section 
530(d)(4)(A) of the Internal Revenue Code 
of 1986 is amended by striking ‘‘10 per-
cent’’ and inserting ‘‘20 percent’’. 
(ii) CONFORMING AMENDMENT.—Sec-
tion 529(c)(6) of such Code is amended by 
inserting ‘‘, except that ‘10 percent’ shall 
be substituted for ‘20 percent’ in subpara-
graph (A) thereof’’ before the period at the 
end of the first sentence. 
(B) MODIFICATION
OF
TAX
TREATMENT 
OF
DEDUCTIBLE
CONTRIBUTIONS.—Paragraph 
(1) of section 530(d) is amended to read as fol-
lows: 
‘‘(1) INCLUSION IN GROSS INCOME.— 
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‘‘(A) IN GENERAL.—Any distribution shall 
be includible in the gross income of the dis-
tributee as follows: 
‘‘(i) So much of the distribution as is 
equal to or less than the deductible amount 
shall be fully included in gross income. 
‘‘(ii) So much of the distribution 
which exceeds the deductible amount shall 
be included in gross income in the manner 
as provided in section 72 (determined by 
applying such section without regard to 
any amounts to which clause (i) applies). 
‘‘(B) DEDUCTIBLE
AMOUNT.—For pur-
poses of this paragraph, the term ‘deductible 
amount’ means the excess of— 
‘‘(i) the sum of contributions to the 
account for which a deduction was allowed 
under section 224 in such year and any 
preceding taxable year, over 
‘‘(ii) the amount of distributions to 
which subparagraph (A)(i) applied to in 
any preceding taxable year.’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for part VIII of subchapter B of chapter 1 of 
such Code is amended by redesignating the item re-
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lating to section 224 as relating to section 225 and 
by inserting after the item relating to section 223 
the following new item: 
‘‘Sec. 224. Coverdell lifelong learning account contributions.’’. 
(f) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall take effect on January 1, 2021. 
(2) ELIGIBLE
EXPENSES.—The amendments 
made by subsection (b) shall apply to distributions 
made after December 31, 2021. 
(3) CONTRIBUTIONS.—The amendments made 
by paragraphs (1)(B) and (2) of subsection (c) shall 
apply to contributions made after December 31, 
2021. 
(4) EMPLOYER
CONTRIBUTION
CREDIT
AND 
BENEFICIARY
DEDUCTIONS.—The 
amendments 
made by subsections (d) and (e) shall apply to tax-
able years beginning after December 31, 2021. 
Æ 
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