Regular Session 2015-2016 Senate Bill 0879 P.N. 1238

PRIOR PRINTER'S NO. 1023

PRINTER'S NO. 1238

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, SCARNATI,

EICHELBERGER AND BROWNE, JUNE 8, 2015

SENATOR BROWNE, APPROPRIATIONS, RE-REPORTED AS AMENDED,

SEPTEMBER 16, 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

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 TO ALLOW ABLE savings

accounts may TO 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 THAT ENSURES 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.

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) (C) 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

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in order to fulfill the objectives of the program, the

investment managers, program managers and trustees shall work

with the department to create PROVIDE a program to develop

investment portfolios and to supervise investments and the

investment programs selected.

(e) (D) 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 TO provide all or part of the

program to beneficiaries residing in another state.

(3) For the department and another state to 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

ADMINISTRATIVE expenses in administering OF 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 TO ADMINISTER the program,

contributions and increase in value on the contributions, for

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distribution to or on behalf of eligible individuals, is hereby

appropriated to the department on a continuing basis to carry

out the provisions of this act.

invested and expended solely to and for the purposes PURPOSE 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 THE department shall have the powers necessary or

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convenient to carry out this act, including, but not limited to,

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 CONTRACTS WITH private consultants, actuaries, managers,

legal counsel and auditors AS NECESSARY 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

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regarding the application of security or other Federal laws

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

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XVI of the Social Security Act (42 U.S.C. § 1381), the

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.

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 COLLECT

ADMINISTRATIVE FEES OR charges for administrative costs upon a

nonqualified withdrawal or termination and deduct the fee from

the amount otherwise payable.

account and return any remaining funds in the account as a

nonqualified withdrawal if necessary for compliance IN ORDER TO

COMPLY with Federal law or if the department, in its sole

discretion, finds DETERMINES 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

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amount of earnings and deductible contributions shall be subject

to taxation as income under the laws of this Commonwealth.

Section 503. Treatment of accounts.

(a) Levy, execution and security for loans LIMITATION.--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 AMOUNTS

contributed to an account, any increase INCREASES in the value

of the account and any qualified withdrawal WITHDRAWALS 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.

account and any increase INCREASES in the value of the account

shall not be used in calculating personal asset contributions

for determining eligibility and need OR NEED TO QUALIFY for

student loan programs, student grant programs or other student

aid programs administered by an agency of the Commonwealth A

COMMONWEALTH AGENCY, except as otherwise may be provided by

Federal law.

(D) DEATH OF BENEFICIARY.--UNLESS PROHIBITED BY FEDERAL LAW,

UPON THE DEATH OF A DESIGNATED BENEFICIARY, PROCEEDS FROM AN

ACCOUNT MAY BE TRANSFERRED TO THE ESTATE OF A DESIGNATED

BENEFICIARY, OR TO AN ACCOUNT FOR ANOTHER ELIGIBLE INDIVIDUAL

SPECIFIED BY THE DESIGNATED BENEFICIARY OR THE ESTATE OF THE

DESIGNATED BENEFICIARY. AN AGENCY OR INSTRUMENTALITY OF THE

COMMONWEALTH MAY NOT SEEK PAYMENT UNDER SECTION 529A(F) OF THE

INTERNAL REVENUE CODE FROM THE ACCOUNT OR ITS PROCEEDS FOR

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BENEFITS PROVIDED TO A DESIGNATED BENEFICIARY.

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

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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