the satisfaction of the Secretary that the manner in 
which that person will administer the trust will be 
consistent with the requirements of this section or 
who has so demonstrated with respect to any indi-
vidual retirement plan. 
‘‘(3) No part of the trust assets will be invested 
in life insurance contracts. 
‘‘(4) The interest of an individual in the bal-
ance of his account is nonforfeitable. 
‘‘(5) The assets of the trust shall not be com-
mingled with other property except in a common 
trust fund or common investment fund. 
‘‘(c) TREATMENT
OF CONTRIBUTIONS
AND DIS-
TRIBUTIONS.— 
‘‘(1) CONTRIBUTION LIMIT.— 
‘‘(A) 
IN
GENERAL.—The 
aggregate 
amount of contributions (other than qualified 
rollover contributions described in subsection 
(d)) for any calendar year to all Lifetime Sav-
ings Accounts maintained for the benefit of an 
individual shall not exceed $5,000. 
‘‘(B) COST-OF-LIVING ADJUSTMENT.— 
‘‘(i) IN GENERAL.—In the case of any 
calendar year after 2005, the $5,000
amount under subparagraph (A) shall be 
increased by an amount equal to— 
‘‘(I) such dollar amount, multi-
plied by 
‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3) 
for the calendar year, determined by 
substituting ‘calendar year 2004’ for 
‘calendar year 1992’ in subparagraph 
(B) thereof. 
‘‘(ii) 
ROUNDING
RULES.—If 
any 
amount after adjustment under clause (i) 
is not a multiple of $500, such amount 
shall be rounded to the next lower multiple 
of $500. 
‘‘(2) DISTRIBUTIONS.—Any distribution from a 
Lifetime Savings Account shall not be includible in 
gross income. 
‘‘(d) QUALIFIED ROLLOVER CONTRIBUTION.—For 
purposes of this section, the term ‘qualified rollover con-
tribution’ means a contribution to a Lifetime Savings Ac-
count— 
‘‘(1) from another such account of the same 
beneficiary, but only if such amount is contributed
not later than the 60th day after the distribution 
from such other account, 
‘‘(2) from a Lifetime Savings Account of a 
spouse of the beneficiary of the account to which the 
contribution is made, but only if such amount is 
contributed not later than the 60th day after the 
distribution from such other account, and 
‘‘(3) before January 1, 2006, from— 
‘‘(A) a qualified tuition program pursuant 
to section 529(c)(3)(E), or 
‘‘(B) a Coverdell education savings account 
pursuant to section 530(d)(9). 
‘‘(e) LOSS OF TAXATION EXEMPTION OF ACCOUNT 
WHERE BENEFICIARY ENGAGES IN PROHIBITED TRANS-
ACTION.—Rules similar to the rules of paragraph (2) of 
section 408(e) shall apply to any Lifetime Savings Ac-
count. 
‘‘(f) CUSTODIAL ACCOUNTS.—For purposes of this 
section, a custodial account or an annuity contract issued 
by an insurance company qualified to do business in a 
State shall be treated as a trust under this section if— 
‘‘(1) the custodial account or annuity contract 
would, except for the fact that it is not a trust, con-
stitute a trust which meets the requirements of sub-
section (b), and
‘‘(2) in the case of a custodial account, the as-
sets of such account are held by a bank (as defined 
in section 408(n)) or another person who dem-
onstrates, to the satisfaction of the Secretary, that 
the manner in which he will administer the account 
will be consistent with the requirements of this sec-
tion. 
For purposes of this title, in the case of a custodial ac-
count or annuity contract treated as a trust by reason of 
the preceding sentence, the person holding the assets of 
such account or holding such annuity contract shall be 
treated as the trustee thereof. 
‘‘(g) REPORTS.—The trustee of a Lifetime Savings 
Account shall make such reports regarding such account 
to the Secretary and to the beneficiary of the account with 
respect to contributions, distributions, and such other 
matters as the Secretary may require. The reports re-
quired 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.’’. 
(b) TAX ON EXCESS CONTRIBUTIONS.— 
(1) IN
GENERAL.—Subsection (a) of section 
4973 of the Internal Revenue Code of 1986 (relating 
to tax on excess contributions to certain tax-favored 
accounts and annuities) is amended by striking ‘‘or’’
at the end of paragraph (4), by inserting ‘‘or’’ at the 
end of paragraph (5), and by inserting after para-
graph (5) the following new paragraph: 
‘‘(6) a Lifetime Savings Account (as defined in 
section 530A),’’. 
(2) EXCESS CONTRIBUTION.—Section 4973 of 
such Code is amended by adding at the end the fol-
lowing new subsection: 
‘‘(h) EXCESS CONTRIBUTIONS TO LIFETIME SAVINGS 
ACCOUNTS.—For purposes of this section— 
‘‘(1) IN
GENERAL.—In the case of Lifetime 
Savings Accounts (within the meaning of section 
530A), the term ‘excess contributions’ means the 
sum of— 
‘‘(A) the amount by which the amount con-
tributed for the calendar year to such accounts 
(other than qualified rollover contributions (as 
defined in section 530A(d))) exceeds the con-
tribution limit under section 530A(c)(1), and 
‘‘(B) the amount determined under this 
subsection for the preceding calendar year, re-
duced by the excess (if any) of the maximum 
amount allowable as a contribution under sec-
tion 530A(c)(1) for the calendar year over the
amount contributed to the accounts for the cal-
endar year. 
‘‘(2) SPECIAL RULE.—A contribution shall not 
be taken into account under paragraph (1) if such 
contribution (together with the amount of net in-
come attributable to such contribution) is returned 
to the beneficiary before July 1 of the year following 
the year in which the contribution is made.’’. 
(c) FAILURE TO PROVIDE REPORTS ON LIFETIME 
SAVINGS ACCOUNTS.—Paragraph (2) of section 6693(a) 
of the Internal Revenue Code of 1986 (relating to failure 
to provide reports on individual retirement accounts or an-
nuities) is amended by striking ‘‘and’’ at the end of sub-
paragraph (D), by striking the period at the end of sub-
paragraph (E) and inserting ‘‘, and’’, and by adding at 
the end the following new subparagraph: 
‘‘(F) section 530A(g) (relating to Lifetime 
Savings Accounts).’’. 
(d) ROLLOVERS FROM CERTAIN OTHER TAX-FREE 
ACCOUNTS.— 
(1) QUALIFIED STATE TUITION PLANS.—Para-
graph (3) of section 529(c) of the Internal Revenue 
Code of 1986 (relating to distributions) is amended 
by adding at the end the following new subpara-
graph:
‘‘(E) ROLLOVERS
TO
LIFETIME
SAVINGS 
ACCOUNTS.— 
‘‘(i) IN GENERAL.—Subparagraph (A) 
shall not apply to the qualified portion of 
any distribution which, before January 1, 
2006, and within 60 days of such distribu-
tion, is transferred to a Lifetime Savings 
Account (within the meaning of section 
530A) of the designated beneficiary. This 
subparagraph shall only apply to distribu-
tions in accordance with the previous sen-
tence from an account which was in exist-
ence with respect to such designated bene-
ficiary on December 31, 2003. 
‘‘(ii) QUALIFIED PORTION.—For pur-
poses of this subparagraph, the term 
‘qualified portion’ means the amount equal 
to the sum of— 
‘‘(I) the lesser of $50,000 or the 
amount which is in the account of the 
designated beneficiary on December 
31, 2003, 
‘‘(II) any contributions to such 
account for the taxable year beginning
after December 31, 2004, and before 
January 1, 2005, and 
‘‘(III) any earnings of such ac-
count for such year. 
‘‘(iii) LIMITATION.—The sum of the 
amounts taken into account under clause 
(ii)(II) with respect to all accounts of the 
designated beneficiary plus any amounts 
with respect to such designated beneficiary 
taken 
into 
account 
under 
section 
530(d)(9)(B)(ii) shall not exceed the sum 
of $5,000 plus the earnings attributable to 
such amounts.’’. 
(2) COVERDELL
EDUCATION
SAVINGS
AC-
COUNTS.—Subsection (d) of section 530 of such 
Code (relating to tax treatment of distributions) is 
amended by inserting at the end the following new 
paragraph: 
‘‘(9) ROLLOVERS
TO
LIFETIME
SAVINGS
AC-
COUNTS.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply to the qualified portion of any 
amount paid or distributed from a Coverdell 
education savings account to the extent that the 
amount received is paid, before January 1,
2006, and not later than the 60th day after the 
date of such payment or distribution, into a 
Lifetime Savings Account (within the meaning 
of section 530A) for the benefit of the same 
beneficiary. This paragraph shall only apply to 
amounts paid or distributed in accordance with 
the preceding sentence from an account which 
was in existence with respect to such bene-
ficiary on December 31, 2003. 
‘‘(B) QUALIFIED PORTION.—For purposes 
of this paragraph, the term ‘qualified portion’ 
means the amount equal to the sum of— 
‘‘(i) the amount which is in the ac-
count of the beneficiary on December 31, 
2003, 
‘‘(ii) any contributions to such ac-
count for the taxable year beginning after 
December 31, 2004, and before January 1, 
2005, and 
‘‘(iii) any earnings of such account for 
such year. 
‘‘(C) 
LIMITATION.—The 
sum 
of 
the 
amounts taken into account under subpara-
graph (B)(ii) with respect to all accounts of the 
beneficiary plus any amounts with respect to
such beneficiary taken into account under sec-
tion 529(c)(3)(E)(ii)(II) shall not exceed the 
sum of $5,000 plus the earnings attributable to 
such amounts.’’. 
(e) CONFORMING AMENDMENT.—The table of parts 
for subchapter F of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the fol-
lowing new item: 
‘‘Part IX. Lifetime Savings Accounts.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2004. 
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