[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4023 Introduced in Senate (IS)]
<DOC>
117th CONGRESS
2d Session
S. 4023
To amend the Internal Revenue Code of 1986 to establish Lifelong
Learning and Training Account programs.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 7, 2022
Mr. Warner (for himself and Mr. Coons) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to establish Lifelong
Learning and Training Account programs.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Lifelong Learning and Training
Account Act of 2021''.
SEC. 2. LIFELONG LEARNING AND TRAINING ACCOUNT PROGRAMS.
(a) In General.--Part VIII of subchapter F of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting after section 530
the following new section:
``SEC. 530A. LIFELONG LEARNING AND TRAINING ACCOUNT PROGRAMS.
``(a) In General.--A Lifelong Learning and Training Account program
shall be exempt from taxation under this subtitle. Notwithstanding the
preceding sentence, such program shall be subject to the taxes imposed
by section 511.
``(b) Lifelong Learning and Training Account Program.--For purposes
of this section--
``(1) In general.--The term `Lifelong Learning and Training
Account program' means a program established and maintained by
a State or agency or instrumentality thereof--
``(A) under which the designated beneficiary of the
account or their employer may make contributions to an
account which is established for the purpose of meeting
the qualified training expenditures of such
beneficiary, and
``(B) which meets the other requirements of this
section.
``(2) Qualified trust.--Except to the extent provided in
regulations, a program shall not be treated as a Lifelong
Learning and Training Account program unless such program
provides that amounts are held in a qualified trust and such
program has received a ruling or determination by the Secretary
that such program meets the applicable requirements for a
Lifelong Learning and Training Account program. For purposes of
the preceding sentence, the term `qualified trust' means a
trust which is created or organized in the United States for
the exclusive benefit of designated beneficiaries and with
respect to which the requirements of paragraphs (2) and (5) of
section 408(a) are met.
``(3) Requirements.--
``(A) In general.--A program shall not be treated
as a Lifelong Learning and Training Account program
unless it provides--
``(i) that contributions may only be made
in cash,
``(ii) separate accounting for each
designated beneficiary,
``(iii) that no interest in the program or
any portion thereof may be used as security for
a loan,
``(iv) that no contributions may be made on
behalf of a designated beneficiary--
``(I) in excess of $2,000 during
any calendar year,
``(II) if the total amount in the
account of such beneficiary is in
excess of $15,000, or
``(III) during any calendar year
which begins after such beneficiary
attains 57 years of age,
``(v) that any distribution shall be made
in accordance with the requirements under
subparagraphs (B) and (C), and
``(vi) that required distributions shall be
made in accordance with paragraph (6).
``(B) Method of distribution.--
``(i) In general.--For purposes of any
distribution from the account of a designated
beneficiary under a Lifelong Learning and
Training Account program--
``(I) the applicable amount of such
distribution shall be drawn from
amounts transferred to the account of
the designated beneficiary pursuant to
paragraph (4) and any earnings thereon,
and
``(II) after application of
subclause (I), the remainder of such
distribution shall be drawn from
amounts contributed by the designated
beneficiary or their employer and any
earnings thereon.
``(ii) Applicable amount.--For purposes of
clause (i)(I), the applicable amount shall be
an amount equal to the lesser of--
``(I) 50 percent of the amount of
the distribution, or
``(II) the total amount of any
available funds in the account of the
designated beneficiary which were
transferred pursuant to paragraph (4)
and any earnings thereon.
``(iii) Other methods.--The Secretary may
amend, alter, or supplement the distribution
requirements under this subparagraph in such
manner as the Secretary deems appropriate.
``(C) Reporting.--For purposes of any distribution
from the account of a designated beneficiary under a
Lifelong Learning and Training Account program, the
administrator shall provide the beneficiary and the
Secretary with such information as the Secretary deems
appropriate, including--
``(i) the amount of such distribution,
including the applicable amount of such
distribution (as described in subparagraph
(B)(ii)), and
``(ii) whether such distribution was
provided--
``(I) directly to the program
described in clauses (i) through (iii)
of subsection (e)(5)(A) which provides
training to the beneficiary, or
``(II) to reimburse the beneficiary
for any qualified training expenditures
incurred by such beneficiary.
``(4) Matching funds.--
``(A) Transfer to beneficiary account.--
``(i) In general.--Out of any moneys in the
Treasury not otherwise appropriated, the
Secretary shall transfer to the account of any
designated beneficiary under a Lifelong
Learning and Training Account program an amount
equal to any amounts contributed to such
account by such beneficiary or their employer
which occur during any calendar year which
begins after the date on which such beneficiary
attains 24 years of age.
``(ii) Limitation.--Any amounts transferred
by the Secretary to the account of any
designated beneficiary pursuant to clause (i)
during any calendar year--
``(I) shall not exceed $1,000, and
``(II) shall not be subject to the
limitation under paragraph
(3)(A)(iv)(I).
``(B) Deposit of matching funds.--Any amounts
required to be transferred to the account of a
designated beneficiary under subparagraph (A) shall be
transferred by the Secretary as soon as is practicable
following any contribution to such account by such
beneficiary or their employer.
``(C) Reduction in matching funds.--
``(i) In general.--For each applicable
taxable year, the dollar amount in subparagraph
(A)(ii)(I) shall be reduced (but not below
zero) by an amount equal to the greater of--
``(I) an amount which bears the
same ratio to such dollar amount as--
``(aa) the amount (not less
than zero) equal to the
adjusted gross income of the
taxpayer for the applicable
taxable year minus $72,000,
bears to
``(bb) $10,000, or
``(II) an amount which bears the
same ratio to such dollar amount as--
``(aa) the amount (not less
than zero) equal to the earned
income (as described in section
32(c)(2)) of the designated
beneficiary for the applicable
taxable year minus $72,000,
bears to
``(bb) $10,000.
``(ii) Married individuals.--In the case of
a designated beneficiary who is married (within
the meaning of section 7703)--
``(I) if such beneficiary has filed
a joint return for the applicable
taxable year, each of the dollar
amounts under clause (i)(I) shall be
doubled for such year, or
``(II) if such beneficiary has not
filed a joint return for the applicable
taxable year, the dollar amount in
subparagraph (A)(ii)(I) shall be
reduced to zero for such year.
``(iii) Applicable taxable year.--For
purposes of this subparagraph, the term
`applicable taxable year' means the taxable
year in which the transfer described in
subparagraph (A)(i) is made to the account of
the designated beneficiary.
``(iv) Excess transfers.--If the total
amount of any transfers made to the account of
a designated beneficiary pursuant to
subparagraph (A)(i) during an applicable
taxable year exceeds the dollar amount under
subparagraph (A)(ii)(I) (after application of
clauses (i) and (ii)) for such taxable year,
the tax imposed by this chapter for such
taxable year shall be increased by the amount
of such excess.
``(D) Distribution of matching funds.--
``(i) In general.--Any distribution under a
Lifelong Learning and Training Account program
made from amounts transferred pursuant to this
paragraph shall be made by the administrator--
``(I) directly to the program
described in clauses (i) through (iii)
of subsection (e)(5)(A) which provides
training to the designated beneficiary,
or
``(II) to reimburse the designated
beneficiary for any qualified training
expenditures incurred by such
beneficiary,
provided that the beneficiary has provided the
administrator with such documentation as is
deemed necessary to ensure compliance with
clause (ii).
``(ii) Prohibition.--No amounts transferred
pursuant to this paragraph to any account of a
designated beneficiary under a Lifelong
Learning and Training Account program may be
distributed for any purpose other than for
payment or reimbursement of qualified training
expenditures.
``(E) Additional reduction for non-qualified
distributions.--For purposes of any amount of a
distribution under a Lifelong Learning and Training
Account program which is includible in the gross income
of the designated beneficiary, any available funds in
the account of such beneficiary which were transferred
pursuant to this paragraph (and any earnings thereon)
shall also be reduced by such amount.
``(F) Rescission of matching funds.--On January 1
of the applicable calendar year, any available funds in
the account of such beneficiary which were transferred
pursuant to this paragraph (and any earnings thereon)
shall be reduced to zero.
``(5) Investment.--
``(A) In general.--Any contributions or transfers
to a Lifelong Learning and Training Account program
(and any earnings thereon) shall be invested by the
administrator in United States Treasury securities with
a maturity date of not greater than 10 years.
``(B) Secretarial authority.--The Secretary may
prescribe such regulations, rules, or other guidance as
may be necessary or appropriate for purposes of
applying this paragraph.
``(6) Required distributions.--On January 1 of the
applicable calendar year, the total amount of available funds
in the account of the designated beneficiary which were
contributed by the designated beneficiary or their employer
(and any earnings thereon) shall be distributed to such
beneficiary.
``(c) Tax Treatment.--
``(1) In general.--Except as otherwise provided in this
subsection, no amount shall be includible in gross income of--
``(A) a designated beneficiary under a Lifelong
Learning and Training Account program, or
``(B) an employer of such beneficiary that
contributes to such program on behalf of such
beneficiary,
with respect to any distribution or earnings under such
program.
``(2) Distributions.--
``(A) In general.--Any distribution under a
Lifelong Learning and Training Account program shall be
includible in the gross income of the distributee in
the manner as provided under section 72 to the extent
not excluded from gross income under any other
provision of this chapter.
``(B) Distributions for qualified training
expenditures.--
``(i) In general.--In the case of any
distributions, if such distributions do not
exceed the qualified training expenditures of
the designated beneficiary, no amount shall be
includible in gross income.
``(ii) Coordination with other credits.--
For purposes of determining the credit allowed
under section 25A, no distribution under a
Lifelong Learning and Training Account program
shall be included as qualified tuition and
related expenses under such section.
``(C) Change in beneficiaries or programs.--
``(i) Rollovers.--Subparagraph (A) shall
not apply to that portion of any distribution
which, within 60 days of such distribution, is
transferred--
``(I) to another Lifelong Learning
and Training Account program for the
benefit of the designated beneficiary,
or
``(II) to the credit of another
designated beneficiary under a Lifelong
Learning and Training Account program
who is a member of the family of the
designated beneficiary with respect to
which the distribution was made.
``(ii) Change in designated
beneficiaries.--Any change in the designated
beneficiary of an interest in a Lifelong
Learning and Training Account program shall not
be treated as a distribution for purposes of
subparagraph (A) if the new beneficiary is a
member of the family of the old beneficiary.
``(iii) Limitation on certain rollovers.--
Clause (i)(I) shall not apply to any transfer
if such transfer occurs within 12 months from
the date of a previous transfer to any Lifelong
Learning and Training Account program for the
benefit of the designated beneficiary.
``(iv) Matching funds forfeited.--In the
case of any transfer described in clause
(i)(II) or any change in the designated
beneficiary of an interest in a Lifelong
Learning and Training Account program (with the
exception of any change due to the death of the
old beneficiary), any amounts transferred to
the account of the designated beneficiary under
subsection (b)(4), and any earnings thereon,
shall be reduced (but not below zero) by an
amount equal to the total amount transferred to
any account of any other beneficiary.
``(D) Special rule for contributions of refunded
amounts.--In the case of a beneficiary who receives a
refund of any qualified training expenditures from any
program described in clauses (i) through (iii) of
subsection (e)(5)(A), subparagraph (A) shall not apply
to that portion of any distribution for the taxable
year which is recontributed to a Lifelong Learning and
Training Account program of which such individual is a
beneficiary, but only to the extent such recontribution
is made not later than 60 days after the date of such
refund and does not exceed the refunded amount.
``(3) Estate tax treatment.--
``(A) In general.--No amount shall be includible in
the gross estate of any individual for purposes of
chapter 11 by reason of an interest in a Lifelong
Learning and Training Account program.
``(B) Amounts includible in estate of designated
beneficiary in certain cases.--Subparagraph (A) shall
not apply to amounts distributed on account of the
death of a beneficiary.
``(4) Other gift tax rules.--For purposes of chapters 12
and 13--
``(A) Treatment of distributions.--Except as
provided in subparagraph (B), in no event shall a
distribution from a Lifelong Learning and Training
Account program be treated as a taxable gift.
``(B) Treatment of designation of new
beneficiary.--The taxes imposed by chapters 12 and 13
shall apply to a transfer by reason of a change in the
designated beneficiary under the program (or a rollover
to the account of a new beneficiary) unless the new
beneficiary is--
``(i) assigned to the same generation as
(or a higher generation than) the old
beneficiary (determined in accordance with
section 2651), and
``(ii) a member of the family of the old
beneficiary.
``(5) Additional tax.--The tax imposed by section 530(d)(4)
shall apply to any payment or distribution from a Lifelong
Learning and Training Account program in the same manner as
such tax applies to a payment or distribution from a Coverdell
education savings account.
``(d) Reports.--Each officer or employee having control of the
Lifelong Learning and Training Account program or their designee shall
make such reports regarding such program to the Secretary and to
designated beneficiaries with respect to contributions, transfers,
distributions, and such other matters as the Secretary may require. 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 the Secretary.
``(e) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Administrator.--The term `administrator' means the
entity which established the Lifelong Learning and Training
Account program and maintains such program, as described in
subsection (b)(1).
``(2) Applicable calendar year.--The term `applicable
calendar year' means the calendar year beginning after the date
on which a designated beneficiary attained 60 years of age.
``(3) Designated beneficiary.--The term `designated
beneficiary' means--
``(A) the individual designated at the commencement
of participation in the Lifelong Learning and Training
Account program as the beneficiary of amounts paid (or
to be paid) to the program, or
``(B) in the case of a change in beneficiaries
described in subsection (c)(2)(C), the individual who
is the new beneficiary.
``(4) Member of family.--The term `member of the family'
means an individual--
``(A) who has attained 25 years of age, and
``(B) who is, with respect to any designated
beneficiary--
``(i) the spouse of such beneficiary,
``(ii) an individual who bears a
relationship to such beneficiary which is
described in subparagraphs (A) through (G) of
section 152(d)(2),
``(iii) the spouse of any individual
described in clause (ii), or
``(iv) any first cousin of such
beneficiary.
``(5) Qualified training expenditures.--
``(A) In general.--The term `qualified training
expenditures' means any expenditures for training which
results in the attainment of a recognized postsecondary
credential and which is provided through--
``(i) a program of training services which
is listed under section 122(d) of the Workforce
Innovation and Opportunity Act (29 U.S.C.
3152(d)),
``(ii) a program which is conducted by an
area career and technical education school, a
community college, or a labor organization, or
``(iii) a program which is sponsored and
administered by an industry trade association,
industry or sector partnership, or labor
organization.
``(B) Related definitions.--For purposes of
subparagraph (A)--
``(i) Area career and technical education
school.--The term `area career and technical
education school' means such a school, as
defined in section 3 of the Carl D. Perkins
Career and Technical Education Act of 2006 (20
U.S.C. 2302), which participates in a program
under that Act (20 U.S.C. 2301 et seq.).
``(ii) Community college.--The term
`community college' means an institution
which--
``(I) is a junior or community
college as defined in section 312(f) of
the Higher Education Act of 1965 (20
U.S.C. 1058(f)), except that the
institution need not meet the
requirements of paragraph (1) of that
section; and
``(II) participates in a program
under title IV of that Act (20 U.S.C.
1070 et seq.).
``(iii) Industry or sector partnership.--
The term `industry or sector partnership' has
the meaning given such term under section 3 of
the Workforce Innovation and Opportunity Act
(29 U.S.C. 3102).
``(iv) Industry trade association.--The
term `industry trade association' means an
organization which--
``(I) is described in paragraph (3)
or (6) of section 501(c) and exempt
from taxation under section 501(a); and
``(II) is representing an industry.
``(v) Labor organization.--The term `labor
organization' means a labor organization,
within the meaning of the term in section
501(c)(5).
``(vi) Recognized postsecondary
credential.--The term `recognized postsecondary
credential' means a credential consisting of an
industry-recognized certificate or
certification, a license recognized by the
State involved or Federal Government, or an
associate or baccalaureate degree.
``(C) Exclusion.--The term `qualified training
expenditures' shall not include any amounts paid for
meals, lodging, transportation, or other services
incidental to any training described in subparagraph
(A).
``(6) Application of section 514.--An interest in a
Lifelong Learning and Training Account program shall not be
treated as debt for purposes of section 514.
``(f) Public Awareness.--
``(1) In general.--The Secretary shall conduct a public
information campaign, utilizing paid advertising, to inform the
public of the availability of Lifelong Learning and Training
Account programs.
``(2) Authorization of appropriations.--
``(A) In general.--There is authorized to be
appropriated such sums as are necessary to carry out
this subsection.
``(B) Availability.--Any sums appropriated under
the authorization contained in this subsection shall
remain available, without fiscal year limitation, until
expended.
``(g) Regulations.--Notwithstanding any other provision of this
section, the Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this section and
to prevent abuse of such purposes, including regulations under chapters
11, 12, and 13 of this title.''.
(b) Conforming Amendments.--
(1) Section 135(d)(2)(B) of the Internal Revenue Code of
1986 is amended by striking ``sections 529(c)(3)(B) and
530(d)(2)'' and inserting ``sections 529(c)(3)(B), 530(d)(2),
and 530A(c)(2)(B)''.
(2) The table of sections for part VIII of subchapter F of
chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after the item relating to section 530 the following
new item:
``Sec. 530A. Lifelong Learning and Training Account programs.''.
(c) Administration Assistance.--
(1) In general.--The Secretary of the Treasury, or the
Secretary's delegate (referred to in this paragraph as the
``Secretary''), shall make a grant, in such amount as the
Secretary determines appropriate, to each State or agency or
instrumentality thereof that has established and maintains a
Lifelong Learning and Training Account program under section
530A of the Internal Revenue Code of 1986 (as added by
subsection (a)), for purposes of administering such program.
(2) Authorization of appropriations.--There are authorized
to be appropriated such sums as may be necessary to carry out
the purposes of this subsection.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
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