What This Bill Does
This bill changes the rules for 529 savings accounts (tax-advantaged education savings plans) to allow money to be used for career training and credentialing programs. The bill lets people use 529 account funds to pay for tuition, fees, books and other costs related to getting recognized postsecondary credentials (professional certifications or certificates). This expands what counts as qualified education expenses under current tax law.
Who It Affects
People who have 529 savings accounts and want to use them for career training programs. Individuals pursuing recognized postsecondary credentials. The Internal Revenue Service and Department of Labor (who must work together on regulations).
Key Provisions
• 529 accounts can now be used to pay for tuition, fees, books, supplies and equipment required for enrollment in a recognized postsecondary credential program (Sec. 2(a))
• 529 accounts can now be used to pay fees required to obtain or maintain a recognized postsecondary credential, including certificate or certification programs accredited by the National Commission on Certifying Agencies or the American National Standards Institute (Sec. 2(a))
• 529 accounts can now be used to pay for testing fees and other fees required by the organization issuing the recognized postsecondary credential as a condition of maintaining or obtaining it (Sec. 2(a))
• A "recognized postsecondary credential program" means a program included on a list prepared under the Workforce Innovation and Opportunity Act or one that meets training prerequisites to qualify someone to take an examination required to obtain or maintain a recognized postsecondary credential (Sec. 2(a))
What Changes
Currently, 529 accounts can only be used for qualified higher education expenses at traditional schools. This bill expands what counts as qualified expenses to include costs of career training and credentialing programs that meet specific standards. The Internal Revenue Service, in consultation with the Department of Labor, can issue regulations and guidance identifying which postsecondary credentials qualify.
Important Definitions
Recognized postsecondary credential: A credential defined in section 3(52) of the Workforce Innovation and Opportunity Act. It includes certificate or certification programs accredited by the National Commission on Certifying Agencies or the American National Standards Institute, or any credential the Internal Revenue Service identifies through regulations or guidance.
Recognized postsecondary credential program: A program to obtain a recognized postsecondary credential if it appears on a list prepared under section 122(d) of the Workforce Innovation and Opportunity Act, or if it meets training or educational prerequisites to qualify someone to take an examination required to obtain or maintain a recognized postsecondary credential.
Effective Date
The changes apply to expenses paid or incurred in tax years beginning after the date the bill becomes law (Sec. 2(b)).
I
118TH CONGRESS
1ST SESSION H. R. 1477
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 HOUSE OF REPRESENTATIVES
MARCH 8, 2023
Mr. WITTMAN (for himself and Ms. SPANBERGER) 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 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,
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SECTION 1. SHORT TITLE.
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This Act may be cited as the ‘‘Freedom To Invest
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in Tomorrow’s Workforce Act’’.
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•HR 1477 IH
SEC. 2. CERTAIN CAREER TRAINING AND CREDENTIALING
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EXPENSES TREATED AS QUALIFIED HIGHER
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EDUCATION EXPENSES FOR PURPOSES OF
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529 ACCOUNTS.
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(a) IN GENERAL.—Section 529(e)(3) of the Internal
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Revenue Code of 1986 is amended by adding at the end
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the following new subparagraph:
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‘‘(C) CERTAIN
CAREER
TRAINING
AND
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CREDENTIALING EXPENSES.—
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‘‘(i) IN GENERAL.—The term ‘quali-
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fied higher education expenses’ includes—
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‘‘(I) tuition, fees, books, supplies,
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and equipment required for the enroll-
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ment or attendance of an individual in
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a recognized postsecondary credential
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program, or any other expense in-
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curred in connection with enrollment
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in or attendance at a recognized post-
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secondary credential program if such
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expense would, if incurred in connec-
20
tion with enrollment or attendance at
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an eligible educational institution, be
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covered
under
subparagraph
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(e)(3)(A),
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‘‘(II) fees required to obtain or
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maintain a recognized postsecondary
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•HR 1477 IH
credential (as defined in section 3(52)
1
of the Workforce Innovation and Op-
2
portunity Act), including certificate or
3
certification programs that are accred-
4
ited by the National Commission on
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Certifying Agencies or the American
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National Standards Institute, or any
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postsecondary credential identified in
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regulations or guidance promulgated
9
by the Internal Revenue Service, in
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consultation with the Department of
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Labor, for purposes of this subclause,
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and
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‘‘(III) fees for testing and other
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fees required by the organization
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issuing the recognized postsecondary
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credential as a condition of maintain-
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ing or obtaining the credential.
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‘‘(ii) RECOGNIZED
POSTSECONDARY
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CREDENTIAL PROGRAM.—For purposes of
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this paragraph, the term ‘recognized post-
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secondary credential program’ means a
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program to obtain a recognized postsec-
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ondary credential if such program is in-
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cluded on a list prepared under section
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•HR 1477 IH
122(d) of the Workforce Innovation and
1
Opportunity Act or meets the training or
2
educational prerequisites to qualify an indi-
3
vidual to take an examination developed or
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administered by an organization widely
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recognized as providing reputable creden-
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tials in the occupation, where such exam-
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ination is required to obtain or maintain a
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recognized postsecondary credential.’’.
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(b) EFFECTIVE DATE.—The amendment made by
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this section shall apply to expenses paid or incurred in
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taxable years beginning after the date of the enactment
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of this Act.
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Æ
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