SB 1036

This bill requires the Department of Financial Institutions to establish and

administer a baby bond program and creates a baby bond trust fund managed by the

State of Wisconsin Investment Board.

Under the bill, the State Registrar of Vital Records must provide to DFI a copy

of the record of birth for each child born in the state on or after the bill's effective date.

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.