PRINTER'S NO. 1023
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
879
Session of
2015
INTRODUCED BY BAKER, BARTOLOTTA, McILHINNEY, TEPLITZ, GORDNER,
PILEGGI, SMITH, FONTANA, STEFANO, VANCE, VULAKOVICH, FOLMER,
GREENLEAF, RAFFERTY, AUMENT, HAYWOOD, WARD, BLAKE AND
SCARNATI, JUNE 8, 2015
REFERRED TO FINANCE, JUNE 8, 2015
AN ACT
Providing for the establishment of a savings program by the
Treasury Department to encourage savings accounts for
individuals with disabilities; establishing the Pennsylvania
ABLE Savings Program and the ABLE Savings Program Fund; and
imposing duties on the Treasury Department.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the Pennsylvania
ABLE Act.
Section 102. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"ABLE." Achieving a Better Life Experience.
"ABLE account contract." A contract between a program
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manager or the department and an account owner.
"ABLE savings account." An individual savings account
established in accordance with this act.
"Account." An ABLE savings account.
"Account owner." A person or legal entity authorized to be
an ABLE account owner under section 529A of the Internal Revenue
Code who enters into an ABLE account contract under this act.
"Department." The Treasury Department of the Commonwealth.
"Designated beneficiary." An eligible individual whose
qualified disability expenses may be paid from the account.
"Eligible individual." An eligible individual as defined in
section 529A(e)(1) of the Internal Revenue Code.
"Fund." The ABLE Savings Program Fund established in section
302.
"Internal Revenue Code." The Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1 et seq.).
"Nonqualified withdrawal." A withdrawal from an account
which is not:
(1) A qualified withdrawal.
(2) A rollover distribution.
"Program." The Pennsylvania ABLE Savings Program established
under section 301.
"Qualified ABLE program." As defined in section 529A(b)(1)
of the Internal Revenue Code.
"Qualified disability expense." A qualified disability
expense included under section 529A of the Internal Revenue
Code.
"Qualified withdrawal." A withdrawal from an account to pay
the qualified disability expenses of the designated beneficiary
of the account.
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"Rollover distribution." A rollover distribution as used in
section 529A of the Internal Revenue Code.
CHAPTER 3
PENNSYLVANIA ABLE SAVINGS PROGRAM
Section 301. Pennsylvania ABLE Savings Program.
(a) Establishment.--The department may establish and
maintain a savings program through which ABLE savings accounts
may be opened for eligible individuals for payment of qualified
disability expenses. Notwithstanding any other provision of law,
an ABLE savings program established by the department shall be
maintained at all times in such a manner as to ensure the
program's status as a qualified ABLE program.
(b) Purpose.--The purpose of the program is to empower an
individual with a disability and the individual's family to save
private funds in a savings account to support the individual
with a disability in maintaining health, independence and
quality of life.
(c) Administration.--The department may utilize the
administrative or investment structures of the Tuition Account
Investment Program established by the act of April 3, 1992
(P.L.28, No.11), known as the Tuition Account Programs and
College Savings Bond Act, without separately soliciting
proposals for assistance in the management of all or part of the
program.
(d) Investment manager and trustee.--The department may
contract with one or more persons or other legal entities to
serve as investment managers, program managers and trustees to
the department on behalf of the program. If the department
contracts with investment managers, program managers or trustees
in order to fulfill the objectives of the program, the
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investment managers, program managers and trustees shall work
with the department to create a program to develop investment
portfolios and to supervise investments and the investment
programs selected.
(e) Contracts with other states.--The department may
contract with another state for any of the following:
(1) For another state to provide all or part of the
program to beneficiaries residing in this Commonwealth.
(2) For the department to provide all or part of the
program to beneficiaries residing in another state.
(3) For the department and another state to engage in
joint efforts to establish and maintain ABLE savings
programs.
Section 302. ABLE Savings Program Fund.
(a) Fund established.--The ABLE Savings Program Fund is
established in the State Treasury. The fund shall consist of all
the following:
(1) All contributions made to accounts of eligible
individuals pursuant to ABLE account contracts and all
interest, earnings and additions to the accounts.
(2) Any fees or charges levied on accounts to cover
expenses in administering the program.
(3) Other money appropriated or made available to the
department for the program from any source and all interest,
earnings and additions to the money.
(b) Continuing appropriation.--All money in the fund,
including fees and charges levied on an account to cover the
expenses in administering the program, contributions and
increase in value on the contributions, for distribution to or
on behalf of eligible individuals, is hereby appropriated to the
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department on a continuing basis to carry out the provisions of
this act.
(c) Assets.--The assets of the fund shall be preserved,
invested and expended solely to and for the purposes of carrying
out this act.
(d) Investment.--The money in the fund shall be invested in
accordance with policies established by the department to
provide for an appropriate balance of risk, liquidity and return
commensurate with the management of a prudent investor. The
department, the investment managers, program managers and
trustees shall have the authority to invest and reinvest the
money in the fund in all lawful investments.
Section 303. Operating and administrative costs.
The department shall prepare and, through the Governor,
submit annually to the General Assembly a budget covering the
operating and administrative expenses of the program. Upon
approval by the General Assembly in an appropriation bill,
expenses as incurred by the program and the department shall be
paid from program fees and charges or from other available
funds.
Section 304. Interdepartmental cooperation.
The head of any department, board, commission, agency or
instrumentality of the Commonwealth, unless otherwise prohibited
by law, shall assist the department in providing information
about the program to potential eligible individuals and their
families.
Section 305. Department powers and duties.
In addition to the powers granted by other provisions of this
act, the department shall have the powers necessary or
convenient to carry out this act, including, but not limited to,
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the power to:
(1) Administer the program and the fund.
(2) Enter into contracts with individuals for the
establishment of ABLE savings accounts.
(3) Pay to an account owner or designated beneficiary,
or a third party authorized by an account owner, upon receipt
of appropriate documentation if required by the department,
funds from the account to pay for the eligible individual's
qualified disability expenses.
(4) Contract for goods and services and engage and
employ personnel, including, but not limited to, the service
of private consultants, actuaries, managers, legal counsel
and auditors for rendering professional, managerial and
technical assistance and advice.
(5) Solicit and accept gifts, grants, loans and other
aid from any person, corporation or other entity or from a
government entity and participate in any Federal, State or
local government program that results in additional funds
being available to pay for the qualified disability expenses
of eligible individuals with ABLE savings accounts.
(6) Charge and collect administrative fees and charges
in connection with any transaction, including continued
participation in the program.
(7) Close ABLE savings accounts and return any remaining
funds, minus any fees, to the account owner.
(8) Contract for insurance, letters of credit and
collateral agreements.
(9) Adjust the terms of contracts with account owners.
(10) Solicit answers from appropriate Federal agencies
regarding the application of security or other Federal laws
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to the program.
(11) Consider means whereby contributions into an ABLE
savings account can be deducted from salary.
(12) Promulgate regulations to implement the provisions
of this act.
(13) Take any other action necessary to carry out the
purpose of this act and incidental to the duties imposed on
the department.
CHAPTER 5
ACCOUNTS
Section 501. ABLE savings accounts.
(a) ABLE account contract.--An ABLE savings account may be
opened through a contract entered into by an account owner and
the department. If the account owner is a fiduciary, the account
owner shall continue to have signatory authority over the
account until the account owner relinquishes the authority.
(b) Fiduciaries.--To the extent that Federal law requires an
eligible individual to be the account owner, the following may
enter into an ABLE account contract as fiduciary for an eligible
individual who is a minor or who lacks capacity to enter into an
ABLE account contract:
(1) A parent or guardian.
(2) A person or legal entity designated in writing by
the parent or guardian.
(3) A trustee of a trust for which the eligible
individual is a beneficiary.
(4) For an eligible individual receiving benefits based
on blindness or a disability under Title II of the Social
Security Act (49 Stat. 620, 42 U.S.C. § 401 et seq.) or Title
XVI of the Social Security Act (42 U.S.C. § 1381), the
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representative payee for those benefits.
(5) Any other person or entity authorized under section
529A of the Internal Revenue Code with signature authority
over the account.
(c) Change of designated beneficiary.--An account owner may
change the designated beneficiary named in the ABLE account
contract to another eligible individual if permitted under
section 529A of the Internal Revenue Code.
Section 502. Nonqualified withdrawals.
(a) Value received.--Upon a full or partial withdrawal of
funds from an account, which are not used for qualified
disability expenses, the account owner or the account owner's
designee shall receive the market value of the account for the
amount requested.
(b) Fees.--The department may impose fees and charges for
administrative costs upon a nonqualified withdrawal or
termination and deduct the fee from the amount otherwise
payable.
(c) Involuntary termination.--The department may close an
account and return any remaining funds in the account as a
nonqualified withdrawal if necessary for compliance with Federal
law or if the department, in its sole discretion, finds that
termination is in the best interest of the program or the
designated beneficiary.
(d) Taxation.--In the event of a nonqualified withdrawal, to
the extent the amount withdrawn includes earnings on the
contributions to the account or contributions to the account
that are eligible to be deducted from Pennsylvania income tax
for the tax year in which the contributions were made, the
amount of earnings and deductible contributions shall be subject
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to taxation as income under the laws of this Commonwealth.
Section 503. Treatment of accounts.
(a) Levy, execution and security for loans.--An account
shall not be subject to attachment, levy or execution by any
creditor of a contributor, account owner or designated
beneficiary and shall not be used as security for a loan.
(b) Disability or health benefits.--Any amounts contributed
to an account, any increase in the value of the account and any
qualified withdrawal from the account shall not be used in
calculating personal assets of a designated beneficiary or an
account owner in order to determine eligibility for disability,
medical assistance or other health benefits conferred by the
Commonwealth.
(c) Student aid.--Any amounts contributed to an account and
any increase in the value of the account shall not be used in
calculating personal asset contributions for determining
eligibility and need for student loan programs, student grant
programs or other student aid programs administered by an agency
of the Commonwealth, except as otherwise may be provided by
Federal law.
CHAPTER 7
EXEMPTIONS
Section 701. Exemption from security laws.
The program and accounts are exempt from any statute
regulating securities, including the act of December 5, 1972
(P.L.1280, No.284), known as the Pennsylvania Securities Act of
1972.
Section 702. State tax exemption.
(a) Property of funds.--The property of the program and the
earnings from the program shall be exempt from all taxation by
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the Commonwealth and its political subdivisions.
(b) Contributions.--Contributions made to an account, any
increase in the value of those contributions, the retention or
transfer during life or as a result of death of any legal
interest in an account and payment of qualified disability
expenses of eligible individuals from an account shall be exempt
from all taxation by the Commonwealth and its political
subdivisions.
CHAPTER 21
MISCELLEANOUS PROVISIONS
Section 2101. Limitation.
Any obligation or debt under this act shall not be deemed an
obligation or debt of the Commonwealth, nor shall the
Commonwealth be liable to pay principal and interest on
obligations or to offset any loss of principal and interest
earnings on investments made by the department under this act.
Section 2102. Effective date.
This act shall take effect immediately.
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