SB 165

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 to ensure that amounts deposited into an account are used

only to pay for qualified expenses, as defined under federal law.

Under the bill, an individual may establish an account at a financial

institution, contribute to an account, authorize any other person to contribute to such

an account, and 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 $14,000, and the

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

beneficiary is $100,000. If a beneficiary or account owner incurs costs for qualified

expenses and submits a claim to the financial institution at which the account has

been established, the financial institution must pay the claim 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.

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.