Skills Investment Act of 2019

II 116TH CONGRESS 1ST SESSION S. 275 To amend the Internal Revenue Code of 1986 to provide for lifelong learning accounts, and for other purposes. IN THE SENATE OF THE UNITED STATES JANUARY 30, 2019 Ms. KLOBUCHAR (for herself and Mr. SASSE) 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 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 2019’’. 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 00:01 Feb 06, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S275.IS S275 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 275 IS (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 00:01 Feb 06, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S275.IS S275 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 275 IS (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 00:01 Feb 06, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S275.IS S275 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 275 IS 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 00:01 Feb 06, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S275.IS S275 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 275 IS (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, 2019, 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 00:01 Feb 06, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S275.IS S275 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 275 IS 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 00:01 Feb 06, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S275.IS S275 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 275 IS 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 00:01 Feb 06, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S275.IS S275 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 275 IS 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 technology or equipment (as defined 15 in section 170(e)(6)(F)(i)) or Internet access 16 and related services, if such technology, equip- 17 ment, or services are to be used by the bene- 18 ficiary for services or activities described in sub- 19 paragraph (A) during any of the years the ben- 20 eficiary is participating in or enrolled in any of 21 the services or activities described in subpara- 22 graph (A).’’. 23 (c) MODIFICATION OF RULES RELATING TO AGE RE- 24 STRICTIONS AND CONTRIBUTIONS.— 25 VerDate Sep 11 2014 00:01 Feb 06, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S275.IS S275 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 275 IS (1) $10,000 ACCOUNT LIMIT AFTER AGE 30.— 1 (A) IN GENERAL.—Subparagraph (E) of 2 section 530(b)(1) of the Internal Revenue Code 3 of 1986 is amended by inserting ‘‘in excess of 4 $10,000’’ after ‘‘any balance to the credit of 5 the designated beneficiary’’. 6 (B) CONTRIBUTION LIMIT.—Paragraph (1) 7 of section 530(b)(1) of such Code is amended 8 by striking ‘‘or’’ at the end of clause (ii), by 9 striking the period at the end of clause (iii) and 10 inserting ‘‘, or’’, and by adding at the end the 11 following new clause: 12 ‘‘(iv) in the case of a beneficiary who 13 is over the age of 30, if such contribution 14 would result in the balance of the account 15 exceeding $10,000.’’. 16 (2) INCREASED AGE LIMIT FOR CONTRIBU- 17 TIONS.—Clause (ii) of section 530(b)(1)(A) of the 18 Internal Revenue Code of 1986 is amended by strik- 19 ing ‘‘age 18’’ and inserting ‘‘age 70’’. 20 (3) INCREASED CONTRIBUTION LIMITATION 21 FOR INDIVIDUALS OVER AGE 30.— 22 (A) IN GENERAL.—Section 23 530(b)(1)(A)(iii) of the Internal Revenue Code 24 of 1986 is amended by inserting ‘‘($4,000 in 25 VerDate Sep 11 2014 00:01 Feb 06, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S275.IS S275 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 275 IS the case of an account the designated bene- 1 ficiary of which has attained age of 30 before 2 the end of the taxable year)’’ after ‘‘$2,000’’. 3 (B) CONFORMING AMENDMENT.—Section 4 4973(e)(1)(A) of such Code is amended by 5 striking ‘‘$2,000’’ and inserting ‘‘the limitation 6 applicable under section 530(b)(1)(A)(iii)’’. 7 (4) NO CHANGE IN BENEFICIARY AFTER AGE 8 30.—Paragraph (6) of section 530(d) of the Internal 9 Revenue Code of 1986 is amended by striking ‘‘shall 10 not be treated as a distribution for purposes of para- 11 graph (1) if the new beneficiary’’ and inserting 12 ‘‘shall not be treated as a distribution for purposes 13 of paragraph (1) if— 14 ‘‘(A) the old beneficiary has not attained 15 age 30 before the date of the change in bene- 16 ficiary, and 17 ‘‘(B) the new beneficiary’’. 18 (d) CREDIT FOR EMPLOYER CONTRIBUTIONS.— 19 (1) IN GENERAL.—Subpart D of part IV of 20 subchapter A of chapter 1 of the Internal Revenue 21 Code of 1986 is amended by adding at the end the 22 following new section: 23 VerDate Sep 11 2014 00:01 Feb 06, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S275.IS S275 pamtmann on DSKBFK8HB2PROD with BILLS 11 •S 275 IS ‘‘SEC. 45T. EMPLOYEE EDUCATIONAL SKILLS AND DEVEL- 1 OPMENT EXPENSES. 2 ‘‘(a) GENERAL RULE.—For purposes of section 38, 3 the employee educational skills and development contribu- 4 tion credit determined under this section for any taxable 5 year is 25 percent of the nonelective contributions made 6 by the taxpayer during the taxable year to a Coverdell life- 7 long learning account (as defined in section 530(b)) the 8 designated beneficiary of which is an employee of the tax- 9 payer. 10 ‘‘(b) SPECIAL RULES AND DEFINITIONS.—For pur- 11 poses of this section— 12 ‘‘(1) EMPLOYEE.— 13 ‘‘(A) CERTAIN EMPLOYEES EXCLUDED.— 14 The term ‘employee’ shall not include— 15 ‘‘(i) an employee within the meaning 16 of section 401(c)(1), 17 ‘‘(ii) any 2-percent shareholder (as de- 18 fined in section 1372(b)) of an S corpora- 19 tion, 20 ‘‘(iii) any 5-percent owner (as defined 21 in section 416(i)(1)(B)(i)) of taxpayer, or 22 ‘‘(iv) any individual who bears any of 23 the relationships described in subpara- 24 graphs (A) through (G) of section 25 152(d)(2) to, or is a dependent described 26 VerDate Sep 11 2014 00:01 Feb 06, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S275.IS S275 pamtmann on DSKBFK8HB2PROD with BILLS 12 •S 275 IS in section 152(d)(2)(H) of, an individual 1 described in clause (i), (ii), or (iii). 2 ‘‘(B) LEASED EMPLOYEES.—The term 3 ‘employee’ shall include a leased employee with- 4 in the meaning of section 414(n). 5 ‘‘(2) NONELECTIVE CONTRIBUTION.—The term 6 ‘nonelective contribution’ means an employer con- 7 tribution other than an employer contribution pursu- 8 ant to a salary reduction arrangement. 9 ‘‘(3) AGGREGATION AND OTHER RULES MADE 10 APPLICABLE.— 11 ‘‘(A) AGGREGATION RULES.—All employ- 12 ers treated as a single employer under sub- 13 section (b), (c), (m), or (o) of section 414 shall 14 be treated as a single employer for purposes of 15 this section. 16 ‘‘(B) OTHER RULES.—Rules similar to the 17 rules of subsections (c), (d), and (e) of section 18 52 shall apply.’’. 19 (2) CREDIT TREATED AS PART OF GENERAL 20 BUSINESS CREDIT.—Section 38(b) of such Code is 21 amended by striking ‘‘plus’’ at the end of paragraph 22 (31), by striking the period at the end of paragraph 23 (32) and inserting ‘‘, plus’’, and by adding at the 24 end the following new paragraph: 25 VerDate Sep 11 2014 00:01 Feb 06, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S275.IS S275 pamtmann on DSKBFK8HB2PROD with BILLS 13 •S 275 IS ‘‘(33) the employee educational skills and devel- 1 opment contribution credit determined under section 2 45T(a).’’. 3 (3) CLERICAL AMENDMENT.—The table of sec- 4 tions for subpart D of part IV of subchapter A of 5 chapter 1 of such Code is amended by adding at the 6 end the following new item: 7 ‘‘Sec. 45T. Employee educational skills and development expenses.’’. (e) ALLOWANCE OF DEDUCTION FOR BENE- 8 FICIARY.— 9 (1) IN GENERAL.—Part VIII of subchapter B 10 of chapter 1 of the Internal Revenue Code of 1986 11 is amended by redesignating section 224 as section 12 225 and by inserting after section 223 the following 13 new section: 14 ‘‘SEC. 224. COVERDELL LIFELONG LEARNING ACCOUNT 15 CONTRIBUTIONS. 16 ‘‘(a) IN GENERAL.—In the case of an individual 17 who— 18 ‘‘(1) is the designated beneficiary of a Coverdell 19 lifelong learning account (as defined in section 20 530(b)(1)), and 21 ‘‘(2) has attained the age of 18 before the close 22 of the taxable year, 23 VerDate Sep [Text truncated for display. Full text available on Congress.gov.]