What This Bill Does
This bill changes the tax rules for 529 savings accounts (education savings plans that grow tax-free) to allow money saved in these accounts to pay for career training and certification programs. Currently, 529 accounts only cover traditional college expenses. The bill expands what counts as a qualified education expense to include fees and costs for getting recognized career credentials.
Who It Affects
People who have or want to open 529 savings accounts to pay for education and training expenses.
Key Provisions
• Certain expenses for enrolling in or attending a recognized postsecondary credential program now count as qualified higher education expenses. These include tuition, fees, books, supplies and equipment required for the program. (Sec. 2(a))
• Fees required to obtain or maintain a recognized postsecondary credential now count as qualified expenses. This includes testing fees and fees required by the organization issuing the credential. (Sec. 2(a))
• A recognized postsecondary credential program means a program included on a list prepared under section 122(d) of the Workforce Innovation and Opportunity Act or a program meeting training or educational prerequisites to qualify someone to take an examination from an organization that provides widely recognized reputable credentials. (Sec. 2(a))
• A recognized postsecondary credential includes a credential defined in section 3(52) of the Workforce Innovation and Opportunity Act, including credentials from certificate or certification programs accredited by the National Commission for Certifying Agencies or the American National Standards Institute. (Sec. 2(a))
What Changes
If this becomes law, individuals can use their 529 account savings to pay for expenses related to obtaining or maintaining recognized career training credentials, not just traditional college attendance.
Important Definitions
"Recognized postsecondary credential" means a credential as defined in the Workforce Innovation and Opportunity Act, including certificates or certifications accredited by the National Commission for Certifying Agencies or the American National Standards Institute, or any other credential the Secretary recognizes through regulations or guidance.
Effective Date
The amendment applies to expenses paid or incurred in tax years beginning after the date the bill becomes law. (Sec. 2(b))
II
118TH CONGRESS
1ST SESSION
S. 722
To amend the Internal Revenue Code of 1986 to permit certain expenses
associated with obtaining or maintaining recognized postsecondary cre-
dentials to be treated as qualified higher education expenses for purposes
of 529 accounts.
IN THE SENATE OF THE UNITED STATES
MARCH 8, 2023
Ms. KLOBUCHAR (for herself, Mr. BRAUN, Ms. DUCKWORTH, Ms. COLLINS,
Mrs. FEINSTEIN, Mr. MANCHIN, and Mr. HEINRICH) introduced the fol-
lowing bill; which was read twice and referred to the Committee on Fi-
nance
A BILL
To amend the Internal Revenue Code of 1986 to permit
certain expenses associated with obtaining or maintaining
recognized postsecondary credentials to be treated as
qualified higher education expenses for purposes of 529
accounts.
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 ‘‘Freedom To Invest
4
in Tomorrow’s Workforce Act’’.
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•S 722 IS
SEC. 2. CERTAIN CAREER TRAINING AND CREDENTIALING
1
EXPENSES TREATED AS QUALIFIED HIGHER
2
EDUCATION EXPENSES FOR PURPOSES OF
3
529 ACCOUNTS.
4
(a) IN GENERAL.—Section 529(e)(3) of the Internal
5
Revenue Code of 1986 is amended by adding at the end
6
the following new subparagraph:
7
‘‘(C) CERTAIN
CAREER
TRAINING
AND
8
CREDENTIALING EXPENSES.—
9
‘‘(i) IN GENERAL.—The term ‘quali-
10
fied higher education expenses’ includes—
11
‘‘(I) tuition, fees, books, supplies,
12
and equipment required for the enroll-
13
ment or attendance of an individual in
14
a recognized postsecondary credential
15
program, or any other expense in-
16
curred in connection with enrollment
17
in or attendance at a recognized post-
18
secondary credential program if such
19
expense would, if incurred in connec-
20
tion with enrollment or attendance at
21
an eligible educational institution, be
22
covered under subparagraph (A), and
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‘‘(II) fees required to obtain or
24
maintain a recognized postsecondary
25
credential, including testing and other
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3
•S 722 IS
fees required by the organization
1
issuing the recognized postsecondary
2
credential as a condition of maintain-
3
ing or obtaining the credential.
4
‘‘(ii) RECOGNIZED
POSTSECONDARY
5
CREDENTIAL PROGRAM.—For purposes of
6
this subparagraph, the term ‘recognized
7
postsecondary credential program’ means a
8
program to obtain a recognized postsec-
9
ondary credential if such program is in-
10
cluded on a list prepared under section
11
122(d) of the Workforce Innovation and
12
Opportunity Act or meets the training or
13
educational prerequisites to qualify an indi-
14
vidual to take an examination developed or
15
administered by an organization widely
16
recognized as providing reputable creden-
17
tials in the occupation, where such exam-
18
ination is required to obtain or maintain a
19
recognized postsecondary credential.
20
‘‘(iii) RECOGNIZED
POSTSECONDARY
21
CREDENTIAL.—For purposes of this sub-
22
paragraph, the term ‘recognized postsec-
23
ondary credential’ means—
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•S 722 IS
‘‘(I) a recognized postsecondary
1
credential, as such term is defined in
2
section 3(52) of the Workforce Inno-
3
vation and Opportunity Act (29
4
U.S.C. 3102) (but an industry-recog-
5
nized credential shall be for a pro-
6
gram for which a provider is eligible
7
under section 122 of that Act (29
8
U.S.C. 3152)), including a credential
9
from a certificate or certification pro-
10
gram that is accredited by the Na-
11
tional
Commission
for
Certifying
12
Agencies or the American National
13
Standards Institute, or
14
‘‘(II) any other postsecondary
15
credential recognized for purposes of
16
this subparagraph under regulations
17
or guidance provided by the Secretary,
18
in consultation with the Secretary of
19
Labor.’’.
20
(b) EFFECTIVE DATE.—The amendment made by
21
this section shall apply to expenses paid or incurred in
22
taxable years beginning after the date of the enactment
23
of this Act.
24
Æ
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