From Encore

The biggest investment in encore careers is likely to come, appropriately enough, from the people who want them.

These investments could be promoted through simple reforms, for example, by expanding the approved uses of tax advantaged individual retirement accounts and 401Ks to include such necessary transition costs as education, training, or health coverage. Senators Olympia Snowe (R-Me.) and Maria Cantwell (D-Wash.) propose allowing pre-tax contributions to lifelong learning accounts, an idea that been promoted by the Council on Adult and Experiential Learning.

Some individuals are not waiting for legislative action. They are financing their return to school with after-tax college savings accounts that were intended for younger students. Such 529 accounts (they’re named for the section of the IRS code that created them) allow investments to be withdrawn tax-free as long as the proceeds are spent on higher education. They are likely to catch on quickly if financial service firms turn their marketing efforts toward such Encore 529s.