SB 776

This bill requires the Department of Financial Institutions to implement a

qualified ABLE program under section

529A

of the Internal Revenue Code allowing

tax-exempt accounts for qualified expenses incurred by individuals with

disabilities.

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

Experience 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. Although these accounts, commonly referred to as “ABLE accounts” or “section

529A accounts,” cannot be established under this state's law, they can be established

under another state's law, and if so established, withdrawals from these accounts for

payment of qualified disability expenses for the account beneficiary are exempt from

taxation in this state.

This bill requires DFI to implement and administer a qualified ABLE program,

either directly or by entering into an agreement with another state or alliance of

states to establish an ABLE program or otherwise administer ABLE program

services for the residents of this state. DFI must, within approximately six months,

determine whether implementing the ABLE program directly or by entering into an

agreement is the best option for this state's residents. If DFI enters into an

agreement, the agreement may require the party contracting with DFI to do any of

the following: 1) develop and implement an ABLE program in accordance with all

requirements under federal law and modify the ABLE program as necessary for

participants to qualify for federal income tax benefits; 2) contract for professional

and technical assistance and advice in developing marketing plans and promotional

materials to publicize the ABLE program; 3) work with organizations with expertise

in supporting people with disabilities and their families in administering the

agreement and ensuring accessibility of the ABLE program for people with

disabilities; or 4) take any other action necessary to implement and administer the

ABLE program. The bill also requires DFI to provide on its Internet site and in

written materials certain information concerning ABLE accounts.