AB 236

Under current federal law, states may create a qualified Achieving a Better Life

Experience (ABLE) program under which an individual may establish a tax-exempt

savings account to pay for qualified expenses, such as education, housing, and

transportation costs, for a beneficiary who is an individual with disabilities, as

defined under federal law. The savings accounts are based on, and are similar to,

Internal Revenue Code, section 529, college savings programs.

This bill authorizes the creation of ABLE accounts in this state. Under the bill,

the Department of Administration (DOA) is required to ensure that accounts set up

in this state meet all federal requirements, and DOA must implement and

administer the program as specified under federal law.

Under the bill, an account owner is the beneficiary of the account unless the

beneficiary is a minor or incapable of handling his or her financial affairs, in which

case the beneficiary's parent or guardian is the account owner. Generally, an account

owner may establish an account at a financial institution and may change the

beneficiary to another family member who must be an eligible individual under

federal law. The maximum amount that may be contributed to an account for a

particular beneficiary each year is tied to federal law, and is currently $14,000, and

the maximum total amount of contributions that may be made to such an account for

that beneficiary is tied to the maximum contribution limit of Edvest, Wisconsin's 529

plan. The current limit is $330,000. If a beneficiary incurs costs for qualified

expenses, the financial institution must pay the expenses if there are sufficient funds

in the account.

Any gain that accumulates in the account is exempt from taxation, and

amounts contributed to the account, subject to the annual and lifetime contribution

limits, are tax deductible. In addition, any assets accumulated in the account may

not be used to determine a beneficiary's eligibility for various state programs, such

as long-term care programs and the family care partnership program. Upon

termination of an account, any amounts left in the account are subject to recovery

by the state to reimburse the state for payments the state made for medical

assistance and other public assistance programs that benefitted the beneficiary.

This method of recovery is similar to a current law provision for recovery of

state-paid public assistance payments.

Because this bill relates to an exemption from state or local taxes, it may be

referred to the Joint Survey Committee on Tax Exemptions for a report to be printed

as an appendix to the bill.