Skills Investment Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 1242 To amend the Internal Revenue Code of 1986 to provide for lifelong learning accounts, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 23, 2021 Mr. KILMER (for himself and Mr. THOMPSON of Pennsylvania) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide for lifelong learning accounts, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Skills Investment Act 4 of 2021’’. 5 SEC. 2. COVERDELL LIFELONG LEARNING ACCOUNTS. 6 (a) IN GENERAL.— 7 (1) RENAMING OF COVERDELL EDUCATION SAV- 8 INGS ACCOUNTS.—Section 530 of the Internal Rev- 9 enue Code of 1986 is amended— 10 VerDate Sep 11 2014 00:50 Mar 21, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1242.IH H1242 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 1242 IH (A) by striking ‘‘Coverdell education sav- 1 ings account’’ each place it appears and insert- 2 ing ‘‘Coverdell lifelong learning account’’; and 3 (B) by striking ‘‘COVERDELL EDU- 4 CATION SAVINGS ACCOUNTS’’ in the heading 5 and inserting ‘‘COVERDELL LIFELONG 6 LEARNING ACCOUNTS’’. 7 (2) CONFORMING AMENDMENTS.— 8 (A) Section 26(b)(2)(E) of the Internal 9 Revenue Code of 1986 is amended by striking 10 ‘‘Coverdell education savings accounts’’ and in- 11 serting ‘‘Coverdell lifelong learning accounts’’. 12 (B) Section 72(e)(9) of such Code is 13 amended— 14 (i) by striking ‘‘Coverdell education 15 savings account’’ and inserting ‘‘Coverdell 16 lifelong learning account’’; and 17 (ii) by striking ‘‘COVERDELL EDU- 18 CATION SAVINGS ACCOUNT’’ in the heading 19 and inserting ‘‘COVERDELL LIFELONG 20 LEARNING ACCOUNT’’. 21 (C) Section 135(c)(2)(C) of such Code is 22 amended— 23 VerDate Sep 11 2014 00:50 Mar 21, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1242.IH H1242 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 1242 IH (i) by striking ‘‘Coverdell education 1 savings account’’ and inserting ‘‘Coverdell 2 lifelong learning account’’; and 3 (ii) by striking ‘‘COVERDELL EDU- 4 CATION SAVINGS ACCOUNT’’ in the heading 5 and inserting ‘‘COVERDELL LIFELONG 6 LEARNING ACCOUNT’’. 7 (D) Section 408A(e)(2)(A)(ii) of such Code 8 is amended by striking ‘‘Coverdell education 9 savings account’’ and inserting ‘‘Coverdell life- 10 long learning account’’. 11 (E) Section 529(c) of such Code is amend- 12 ed— 13 (i) by striking ‘‘COVERDELL EDU- 14 CATION SAVINGS ACCOUNTS’’ in the head- 15 ing of paragraph (3)(B)(vi) and inserting 16 ‘‘COVERDELL LIFELONG LEARNING AC- 17 COUNT’’; and 18 (ii) by striking ‘‘an Coverdell edu- 19 cation savings account’’ in paragraph (6) 20 and inserting ‘‘a Coverdell lifelong learning 21 account’’. 22 (F) Section 877A(e)(2) of such Code is 23 amended by striking ‘‘Coverdell education sav- 24 VerDate Sep 11 2014 00:50 Mar 21, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1242.IH H1242 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 1242 IH ings account’’ and inserting ‘‘Coverdell lifelong 1 learning account’’. 2 (G) Section 4973 of such Code is amend- 3 ed— 4 (i) by striking ‘‘Coverdell education 5 savings account’’ each place it appears in 6 subsections (a)(4) and (e)(2)(A) and in- 7 serting ‘‘Coverdell lifelong learning ac- 8 count’’; 9 (ii) by striking ‘‘Coverdell education 10 savings accounts’’ in subsection (e)(1) and 11 inserting ‘‘Coverdell lifelong learning ac- 12 counts’’; and 13 (iii) by striking ‘‘COVERDELL EDU- 14 CATION SAVINGS ACCOUNTS’’ in the head- 15 ing of subsection (e) and inserting 16 ‘‘COVERDELL LIFELONG LEARNING AC- 17 COUNT’’. 18 (H) Section 4975 of such Code is amend- 19 ed— 20 (i) by striking ‘‘Coverdell education 21 savings account’’ each place it appears in 22 subsections (c)(5) and (e)(1)(F) and in- 23 serting ‘‘Coverdell lifelong learning ac- 24 count’’; and 25 VerDate Sep 11 2014 00:50 Mar 21, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1242.IH H1242 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 1242 IH (ii) by striking ‘‘COVERDELL EDU- 1 CATION SAVINGS ACCOUNTS’’ in the head- 2 ing of subsection (c)(5) and inserting 3 ‘‘COVERDELL LIFELONG LEARNING AC- 4 COUNTS’’. 5 (I) Section 6693(a)(2)(F) of such Code is 6 amended by striking ‘‘Coverdell education sav- 7 ings accounts’’ and inserting ‘‘Coverdell lifelong 8 learning accounts’’. 9 (J) The table of sections for part VIII of 10 subchapter F of chapter 1 of such Code is 11 amended by striking ‘‘Coverdell education sav- 12 ings accounts’’ and inserting ‘‘Coverdell lifelong 13 learning accounts’’. 14 (3) TREATMENT OF EXISTING ACCOUNTS.—For 15 purposes of section 530(b)(1) of the Internal Rev- 16 enue Code of 1986, any account established before 17 January 1, 2021, and designated as a Coverdell edu- 18 cation savings account shall be deemed to have been 19 designated as a Coverdell lifelong learning account. 20 (b) EXPANDED USE OF ACCOUNTS.— 21 (1) ELIGIBLE EXPENSES.— 22 (A) IN GENERAL.—Section 530(b)(2)(A) of 23 the Internal Revenue Code of 1986 is amended 24 by striking ‘‘and’’ at the end of clause (i), by 25 VerDate Sep 11 2014 00:50 Mar 21, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1242.IH H1242 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 1242 IH striking the period at the end of clause (ii) and 1 inserting ‘‘, and’’, and by adding at the end the 2 following new clause: 3 ‘‘(iii) qualified educational or skill de- 4 velopment expenses (as defined in para- 5 graph (5)).’’. 6 (B) QUALIFIED EDUCATIONAL OR SKILL 7 DEVELOPMENT EXPENSES.—Section 530(b) of 8 such Code is amended by adding at the end the 9 following new paragraph: 10 ‘‘(5) QUALIFIED EDUCATIONAL OR SKILL DE- 11 VELOPMENT EXPENSES.—The term ‘qualified edu- 12 cational or skill development expenses’ means— 13 ‘‘(A) expenses paid or incurred— 14 ‘‘(i) after the beneficiary attains age 15 16, and 16 ‘‘(ii) for participation or enrollment of 17 the beneficiary in services or activities that 18 are— 19 ‘‘(I) training services described in 20 section 134(c)(3)(D) of the Workforce 21 Innovation and Opportunity Act (29 22 U.S.C. 3174(c)(3)(D)) that are of- 23 fered by a provider included on the 24 list of eligible providers of training 25 VerDate Sep 11 2014 00:50 Mar 21, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1242.IH H1242 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 1242 IH services described in section 122 of 1 such Act (29 U.S.C. 3152), 2 ‘‘(II) career and technical edu- 3 cation activities defined in section 3 of 4 the Carl D. Perkins Career and Tech- 5 nical Education Act of 2006 (20 6 U.S.C. 2302) that are offered through 7 an eligible institution (as defined in 8 such section), 9 ‘‘(III) career services described in 10 clauses (iii), (iv), and (xi) of section 11 134(c)(2)(A) of the Workforce Inno- 12 vation and Opportunity Act (29 13 U.S.C. 3174(c)(2)(A)) that are pro- 14 vided by providers eligible under sec- 15 tion 134(c)(2)(C) of such Act, 16 ‘‘(IV) youth activities described 17 in section 129(c)(2) of the Workforce 18 Innovation and Opportunity Act (29 19 U.S.C. 3164(c)(2)) that are provided 20 by eligible providers of youth work- 21 force investment activities under sec- 22 tion 123 of such Act, or 23 ‘‘(V) adult education and literacy 24 activities, as defined in section 203 of 25 VerDate Sep 11 2014 00:50 Mar 21, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1242.IH H1242 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 1242 IH the Adult Education and Family Lit- 1 eracy Act (29 U.S.C. 3272), that are 2 provided by eligible providers of adult 3 education and literacy activities under 4 section 231 of such Act (29 U.S.C. 5 3321), 6 ‘‘(B) expenses for transportation required 7 for or provided by any of the services or activi- 8 ties described in subparagraph (A), 9 ‘‘(C) expenses for testing necessary for en- 10 rollment in, or certification in connection with, 11 services or activities described in subparagraph 12 (A), or 13 ‘‘(D) expenses for the purchase of any 14 computer software (as defined by section 15 197(e)(3)(B)), computer or peripheral equip- 16 ment (as defined by section 168(i)(2)(B)), fiber 17 optic cable related to computer use, internet ac- 18 cess and related services, if such software, 19 equipment, or services are to be used by the 20 beneficiary for services or activities described in 21 subparagraph (A) during any of the years the 22 beneficiary is participating in or enrolled in any 23 of the services or activities described in sub- 24 paragraph (A).’’. 25 VerDate Sep 11 2014 00:50 Mar 21, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1242.IH H1242 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 1242 IH (c) MODIFICATION OF RULES RELATING TO AGE RE- 1 STRICTIONS AND CONTRIBUTIONS.— 2 (1) $10,000 ACCOUNT LIMIT AFTER AGE 30.— 3 (A) IN GENERAL.—Subparagraph (E) of 4 section 530(b)(1) of the Internal Revenue Code 5 of 1986 is amended by inserting ‘‘in excess of 6 $10,000’’ after ‘‘any balance to the credit of 7 the designated beneficiary’’. 8 (B) CONTRIBUTION LIMIT.—Paragraph (1) 9 of section 530(b) of such Code is amended by 10 striking ‘‘or’’ at the end of clause (ii), by strik- 11 ing the period at the end of clause (iii) and in- 12 serting ‘‘, or’’, and by adding at the end the fol- 13 lowing new clause: 14 ‘‘(iv) in the case of a beneficiary who 15 is over the age of 30, if such contribution 16 would result in the balance of the account 17 exceeding $10,000.’’. 18 (2) INCREASED AGE LIMIT FOR CONTRIBU- 19 TIONS.—Clause (ii) of section 530(b)(1)(A) of the 20 Internal Revenue Code of 1986 is amended by strik- 21 ing ‘‘age 18’’ and inserting ‘‘age 70’’. 22 (3) INCREASED CONTRIBUTION LIMITATION 23 FOR INDIVIDUALS OVER AGE 30.— 24 VerDate Sep 11 2014 00:50 Mar 21, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1242.IH H1242 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 1242 IH (A) IN GENERAL.—Section 1 530(b)(1)(A)(iii) of the Internal Revenue Code 2 of 1986 is amended by inserting ‘‘($4,000 in 3 the case of an account the designated bene- 4 ficiary of which has attained age of 30 before 5 the end of the taxable year)’’ after ‘‘$2,000’’. 6 (B) CONFORMING AMENDMENT.—Section 7 4973(e)(1)(A) of such Code is amended by 8 striking ‘‘$2,000’’ and inserting ‘‘the limitation 9 applicable under section 530(b)(1)(A)(iii)’’. 10 (4) NO CHANGE IN BENEFICIARY AFTER AGE 11 30.—Paragraph (6) of section 530(d) of the Internal 12 Revenue Code of 1986 is amended by striking ‘‘shall 13 not be treated as a distribution for purposes of para- 14 graph (1) if the new beneficiary’’ and inserting 15 ‘‘shall not be treated as a distribution for purposes 16 of paragraph (1) if— 17 ‘‘(A) the old beneficiary has not attained 18 age 30 before the date of the change in bene- 19 ficiary, and 20 ‘‘(B) the new beneficiary’’. 21 (d) CREDIT FOR EMPLOYER CONTRIBUTIONS.— 22 (1) IN GENERAL.—Subpart D of part IV of 23 subchapter A of chapter 1 of the Internal Revenue 24 VerDate Sep 11 2014 00:50 Mar 21, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1242.IH H1242 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 1242 IH Code of 1986 is amended by adding at the end the 1 following new section: 2 ‘‘SEC. 45U. EMPLOYEE EDUCATIONAL SKILLS AND DEVEL- 3 OPMENT EXPENSES. 4 ‘‘(a) GENERAL RULE.—For purposes of section 38, 5 the employee educational skills and development contribu- 6 tion credit determined under this section for any taxable 7 year is 25 percent of the nonelective contributions made 8 by the taxpayer during the taxable year to a Coverdell life- 9 long learning account (as defined in section 530(b)) the 10 designated beneficiary of which is an employee of the tax- 11 payer. 12 ‘‘(b) SPECIAL RULES AND DEFINITIONS.—For pur- 13 poses of this section— 14 ‘‘(1) EMPLOYEE.— 15 ‘‘(A) CERTAIN EMPLOYEES EXCLUDED.— 16 The term ‘employee’ shall not include— 17 ‘‘(i) an employee within the meaning 18 of section 401(c)(1), 19 ‘‘(ii) any 2-percent shareholder (as de- 20 fined in section 1372(b)) of an S corpora- 21 tion, 22 ‘‘(iii) any 5-percent owner (as defined 23 in section 416(i)(1)(B)(i)) of taxpayer, or 24 VerDate Sep 11 2014 00:50 Mar 21, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1242.IH H1242 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 1242 IH ‘‘(iv) any individual who bears any of 1 the relationships described in subpara- 2 graphs (A) through (G) of section 3 152(d)(2) to, or is a dependent described 4 in section 152(d)(2)(H) of, an individual 5 described in clause (i), (ii), or (iii). 6 ‘‘(B) LEASED EMPLOYEES.—The term 7 ‘employee’ shall include a leased employee with- 8 in the meaning of section 414(n). 9 ‘‘(2) NONELECTIVE CONTRIBUTION.—The term 10 ‘nonelective contribution’ means an employer con- 11 tribution other than an employer contribution pursu- 12 ant to a salary reduction arrangement. 13 ‘‘(3) AGGREGATION AND OTHER RULES MADE 14 APPLICABLE.— 15 ‘‘(A) AGGREGATION RULES.—All employ- 16 ers treated as a single employer under sub- 17 section (b), (c), (m), or (o) of section 414 shall 18 be treated as a single employer for purposes of 19 this section. 20 ‘‘(B) OTHER RULES.—Rules similar to the 21 rules of subsections (c), (d), and (e) of section 22 52 shall apply.’’. 23 (2) CREDIT TREATED AS PART OF GENERAL 24 BUSINESS CREDIT.—Section 38(b) of such Code is 25 VerDate Sep 11 2014 00:50 Mar 21, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H1242.IH H1242 kjohnson on DSK79L0C42PROD with BILLS 13 •HR 1242 IH amended by striking ‘‘plus’’ at the end of paragraph 1 (32), by striking the period at the end of paragraph 2 (33) and inserting ‘‘, plus’’, and by adding at the 3 end the following new paragraph: 4 ‘‘(34) the employee educational skills and devel- 5 opment contribution credit determined under section 6 45U(a).’’. 7 (3) CLERICAL AMENDMENT.—The table of sec- 8 tions for subpart D of part IV of subchapter A of 9 chapter 1 of such Code is amended by adding at the 10 end the following new item: 11 ‘‘Sec. 45U. Employee educational skills and development expenses.’’. (e) ALLOWANCE OF DEDUCTION FOR BENE- 12 FICIARY.— 13 (1) IN GENERAL.—Part VIII of subchapter B 14 of chapter 1 of the Internal Revenue Code of 1986 15 is amended by redesignating section 224 as section 16 225 and by inserting after section 223 the following 17 new section: 18 ‘‘SEC. 224. COVERDELL LIFELONG LEARNING ACCOUNT 19 CONTRIBUTIONS. 20 ‘‘(a) IN GENERAL.—In the case of an individual 21 who— 22 ‘‘(1) is the designated beneficiary of a Coverdell 23 lifelong l [Text truncated for display. Full text available on Congress.gov.]