2015 -- S 0413

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO HUMAN SERVICES -- ABLE ACCOUNTS

     Introduced By: Senators Kettle, Ottiano, Algiere, Gee, and Morgan

     Date Introduced: February 25, 2015

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 40 of the General Laws entitled "HUMAN SERVICES" is hereby

amended by adding thereto the following chapter:

CHAPTER 23

ABLE ACCOUNTS

     40-23-1. Legislative findings. – The general assembly finds and declares the following:

     (1) The blind, disabled, and persons of this state suffering from a physical or mental

impairment resulting in severe functional limitations need not only state financial assistance but

also private financial assistance in achieving a better life experience.

     (2) A federal program exists which allows those individuals to receive contributions from

contributors that may be deposited in an account for their care which amount can grow free of

any income tax consequences if the contributions are used for qualifying expenses pursuant to §

529A of the Internal Revenue Code of 1986, as amended (26 U.S.C. §529A).

     (3) These accounts may be utilized by those individuals for disbursements relating to

education, housing, transportation, employment training and support, assistive technology and

personal support services, health prevention and wellness, financial management and

administrative services, legal fees, expenses for oversight and monitoring, funeral and burial

expenses and any other expenses approved under regulations promulgated by the Secretary of the

Treasury.

     (4) This federal program is found to be a financial option worthy of consideration by

persons of this state suffering from physical or mental disabilities and/or impairments.

     40-23-2. Definitions. – As used in this chapter, the following words shall, unless the

context clearly requires otherwise, have the following meanings:

     (1) "Achieving a better life experience account" or "ABLE account" means an account

established under the program pursuant to this section and any implementing regulations for the

purposes of funding future qualified disability expenses of a designated beneficiary.

     (2) "Achieving a better life experience program" or "program" means the qualified ABLE

program established and administered by department of human services and, to the extent so

delegated or contracted by the department of human services, one or more designated

administrators.

     (3) "Contracting state" means a "contracting state" as defined under 26 U.S.C. § 529A.

     (4) "Designated administrator" means any corporation or other entity whose powers and

privileges are provided for in any general or special law, whether for profit or not, designated or

retained by the department of human services for the purpose of administering, subject to the

department's ongoing supervision, all or any portion of the investment, marketing, recordkeeping,

administrative or other functions of the program.

     (5) "Designated beneficiary" means the individual with a disability named as the

beneficiary of an ABLE account.

     (6) "Individual with a disability" means an individual who is an "eligible individual" as

defined under § 529A.

     (7) "Qualified ABLE program" means a "qualified ABLE program" as defined under 26

U.S.C. § 529A.

     (8) "Qualified disability expenses" means "qualified disability expenses" as defined under

26 U.S.C. § 529A.

     (9) "Section 529A" means § 529A of the Internal Revenue Code of 1986, as amended,

(26 U.S.C.§ 529A) or any successor provision thereto, and any regulations promulgated

thereunder or tax announcements or other binding regulatory guidance provided with respect

thereto.

     (10) "State" means the state of Rhode Island.

     40-23-3. Creation of program. – (a) There shall be established within the department of

human services the achieving a better life experience program for the purposes of administering

achieving a better life experience accounts established to encourage and assist individuals and

families in saving private funds for the purpose of supporting individuals with disabilities. Under

the program, one or more persons may make contributions to an ABLE account to meet the

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qualified disability expenses of the designated beneficiary of the account.

     (b) Unless otherwise permitted under 26 U.S.C. § 529A, the owner of an ABLE account

shall be the designated beneficiary of the account; provided that if the designated beneficiary of

the account is a minor or has a custodian or other fiduciary appointed for the purposes of

managing such beneficiary's financial affairs, a custodian or fiduciary for such designated

beneficiary may serve as the account owner if such form of ownership is permitted or not

prohibited under 26 U.S.C. § 529A.

     (c) Unless otherwise permitted under 26 U.S.C. § 529A, the designated beneficiary of an

ABLE account shall be a resident of the state or of a contracting state. The department shall

determine residency for such purpose in such manner as may be required or permissible under 26

U.S.C. § 529A or, in the absence of any guidance under 26 U.S.C. § 529A, by such other means

as the department shall consider advisable for purposes of satisfying the requirements of 26

U.S.C. § 529A.

     (d) Any person may make contributions to an ABLE account to meet the qualified

disability expenses of the designated beneficiary of the account; provided that the account and

contributions meet the other requirements of this section and regulations promulgated by the

department.

     (e) The department and, to the extent required by the terms of such designation, any

designated administrator shall operate the program so that it shall constitute a qualified ABLE

program in compliance with the requirements of 26 U.S.C. § 529A.

     (f) The department and any designated administrator shall provide investment options for

the investment of amounts contributed to an ABLE account.

     40-23-4. Contributions to be held in trust. -- Funds contributed to the program shall be

held in trust in a special account to be created by the department and shall not be co-mingled with

any state funds appropriated by the general assembly for the support of or the programs

administered by the department

     40-23-5. Rules and regulations. – The department shall have the power and authority to

promulgate rules and regulations, enter into contracts and agreements, charge fees and expenses

to the funds held under the program or to persons establishing or owning ABLE accounts, make

reports, retain designated administrators, employees, experts and consultants and do all other

things necessary or convenient to implement this section.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO HUMAN SERVICES -- ABLE ACCOUNTS

***

     This act would establish a private savings (ABLE) account for qualifying disabled

persons allowing contributions to grow tax free if used for qualifying expenses pursuant to §

529A of the Internal Revenue Service Code of 1986, as amended.

     This act would take effect upon passage.

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