Creating a baby bond program and baby bond fund, granting rule-making authority, and making an appropriation. (FE)

In consultation with the Department of Health Services and the Department of Revenue, DFI must determine whether, on the day before the child was born, the child's mother met the income requirements for the Medical Assistance program, and if this criteria is satisfied, DFI must establish a baby bond account for the child, with the child designated as the account beneficiary. DFI must then deposit $3,000 into the baby bond trust fund and credit this amount to the child's baby bond account.

The amount in the account consists of the initial $3,000, investment income generated through management of the baby bond trust fund by SWIB, and any allocated donations, gifts, grants, bequests, or other contributions received by the baby bond program. When the account beneficiary attains 18 years of age, if certain conditions are satisfied, the account beneficiary may receive distribution of the full account balance to pay expenses associated with postsecondary education of the account beneficiary; child care or education of a minor dependent of the account beneficiary; the purchase of a home by the account beneficiary; starting a business by the account beneficiary; or contributing to a retirement savings account by the account beneficiary. Upon application to DFI, an account beneficiary is eligible for distribution of the account balance if all of the following requirements are satisfied:

1) the account beneficiary is at least 18 years of age; 2) with an exception, the account beneficiary and at least one of the account beneficiary's parents is a Wisconsin resident; 3) the account beneficiary has successfully completed a financial literacy course developed by DFI; and 4) the account beneficiary certifies that the account beneficiary will use the money distributed only to pay expenses described above. If an account beneficiary or the account beneficiary's parents relocate from Wisconsin prior to the account beneficiary's 18th birthday, the account beneficiary is eligible for the distribution if the account beneficiary returns to Wisconsin and remains a Wisconsin resident for at least one year thereafter. A distribution from an account is not subject to state income tax. DFI may terminate an account beneficiary's account if the account beneficiary dies, the account balance is $0, or the account beneficiary is at least 30 years of age and has not requested a distribution or has failed to satisfy the conditions for distribution. The balance of an account that is terminated remains in the baby bond trust fund for further use for the baby bond 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.