BILL NUMBER: AB 449 ENROLLED
BILL TEXT
PASSED THE SENATE SEPTEMBER 8, 2015
PASSED THE ASSEMBLY SEPTEMBER 9, 2015
AMENDED IN SENATE SEPTEMBER 3, 2015
AMENDED IN SENATE AUGUST 17, 2015
AMENDED IN SENATE JULY 1, 2015
AMENDED IN ASSEMBLY MAY 5, 2015
AMENDED IN ASSEMBLY MARCH 19, 2015
INTRODUCED BY Assembly Member Irwin
(Principal coauthor: Assembly Member Wilk)
(Principal coauthors: Senators Hertzberg and Pavley)
(Coauthors: Assembly Members Baker, Brown, Chávez, Cristina
Garcia, Jones, Maienschein, Steinorth, and Waldron)
(Coauthors: Senators Allen, Anderson, and Vidak)
FEBRUARY 23, 2015
An act to add Section 23711.4 to the Revenue and Taxation Code,
and to add Sections 4877, 4878, 4880, 4882, and 4884 to the Welfare
and Institutions Code, relating to taxation, and making an
appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 449, Irwin. Income taxation: savings plans: Qualified ABLE
Program.
The Personal Income Tax Law and the Corporation Tax Law, in
specified conformity with federal income tax laws regarding qualified
tuition programs, provide that distributions from a qualified
tuition program are generally not included in the income of the donor
or the beneficiary, as specified.
Existing federal law, the Stephen Beck Jr., Achieving a Better
Life Experience Act of 2014 (ABLE Act), for taxable years beginning
on or after January 1, 2015, encourages and assists individuals and
families to save private funds for the purpose of supporting persons
with disabilities to maintain their health, independence, and quality
of life by excluding from gross income distributions used for
qualified disability expenses by a beneficiary of a Qualified ABLE
Program established and maintained by a state, as specified.
This bill would, for taxable years beginning on or after January
1, 2016, conform to these federal income tax law provisions relating
to the ABLE Act under the Corporation Tax Law, as provided. The bill
would also establish in state government the ABLE program trust for
purposes of implementing the federal ABLE Act. The bill would
authorize the ABLE Act Board to adopt regulations to implement the
program. The bill would create the program fund, a continuously
appropriated fund, thereby making an appropriation, and the
administrative fund, as specified. The bill would require the board
to administer the program in compliance with the requirements of the
federal ABLE Act.
This bill would become operative only if SB 324 is enacted and
takes effect on or before January 1, 2016.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. It is the intent of the Legislature to further the
purposes of the federal Stephen Beck Jr., Achieving a Better Life
Experience Act to ensure that people with disabilities may save for
the future to achieve greater independence.
SEC. 2. This act shall be known, and may be cited, as the
California Achieving a Better Life Experience Act.
SEC. 3. Section 23711.4 is added to the Revenue and Taxation Code,
to read:
23711.4. For taxable years beginning on or after January 1, 2016,
Section 529A of the Internal Revenue Code, relating to qualified
ABLE programs, added by Section 102 of Division B of Public Law
113-295, shall apply, except as otherwise provided.
(a) Section 529A(a) of the Internal Revenue Code is modified as
follows:
(1) By substituting the phrase "under Part 10 (commencing with
Section 17001) and this part" in lieu of the phrase "under this
subtitle."
(2) By substituting "Article 2 (commencing with Section 23731)" in
lieu of "Section 511."
(b) Section 529A(c)(3)(A) of the Internal Revenue Code is modified
by substituting "2.5 percent" in lieu of "10 percent."
(c) A copy of the report required to be filed with the Secretary
of the Treasury under Section 529A(d) of the Internal revenue Code,
relating to reports shall be filed with the Franchise Tax Board at
the same time and in the same manner as specified in that section.
SEC. 4. Section 4877 is added to the Welfare and Institutions
Code, to read:
4877. (a) There is hereby created an instrumentality of the State
of California to be known as the California ABLE Program Trust.
(b) The purposes, powers, and duties of the California ABLE
Program Trust are vested in, and shall be exercised by, the board.
(c) The board, in the capacity of trustee, shall have the power
and authority to do all of the following:
(1) Sue and be sued.
(2) Make and enter into contracts necessary for the administration
of the ABLE program trust, and engage personnel, including
consultants, actuaries, managers, counsel, and auditors, as necessary
for the purpose of rendering professional, managerial, and technical
assistance and advice.
(3) Adopt a corporate seal and change and amend it from time to
time.
(4) Cause moneys in the program fund to be held and invested and
reinvested.
(5) Accept any grants, gifts, appropriations, and other moneys
from any unit of federal, state, or local government or any other
person, firm, partnership, or corporation for deposit to the
administrative fund or the program fund.
(6) Enter into agreements with designated beneficiaries or
eligible individuals to establish and maintain an ABLE account.
(7) Make provisions for the payment of costs of administration and
operation of the ABLE program trust.
(8) Carry out the duties and obligations of the ABLE program trust
pursuant to this chapter and the federal ABLE Act pursuant to
Section 529A of the Internal Revenue Code and federal regulations
issued pursuant to that code, and have any other powers as may be
reasonably necessary for the effectuation of the purposes,
objectives, and provisions of this chapter.
(9) Carry out studies and projections in order to advise
designated beneficiaries or eligible individuals regarding present
and estimated future qualified disability expenses and the levels of
financial participation in the ABLE program trust required in order
to assist designated beneficiaries or eligible individuals.
(10) Participate in any other way in any federal, state, or local
governmental program for the benefit of the ABLE program trust.
(11) Promulgate, impose, and collect administrative fees and
charges in connection with transactions of the ABLE program trust,
and provide for reasonable service charges, including penalties for
cancellations.
(12) Set minimum and maximum investment levels.
(13) Administer the funds of the ABLE program trust.
(14) Procure insurance against any loss in connection with the
property, assets, or activities of the ABLE program trust.
(15) Procure insurance indemnifying any member of the board from
personal loss or liability resulting from a member's action or
inaction as a member of the board.
(d) The Treasurer shall, on behalf of the board, appoint an
executive director, who shall not be a member of the board and who
shall serve at the pleasure of the board. The Treasurer shall
determine the duties of the executive director and other staff as
necessary and set his or her compensation. The board may authorize
the executive director to enter into contracts on behalf of the board
or conduct any business necessary for the efficient operation of the
board.
SEC. 5. Section 4878 is added to the Welfare and Institutions
Code, to read:
4878. (a) The board shall segregate moneys received by the ABLE
program trust into two funds, which shall be identified as the
program fund and the administrative fund.
(1) Notwithstanding Section 13340 of the Government Code, the
program fund is hereby continuously appropriated, without regard to
fiscal years, to the ABLE Act Board for the purposes specified in
this act.
(2) The moneys in the administrative fund shall be available for
the ABLE Act Board, upon appropriation, for administration of the
act. Administrative costs shall not exceed 3 percent of the incoming
funds for each fiscal year for the first five fiscal years following
the opening of the first ABLE Act account. After the five-year
period, administrative costs shall not exceed 1 percent of the
incoming funds for each fiscal year.
(3) Funding for startup and administrative costs for the board
shall be provided in the form of a loan from the General Fund
sufficient to cover the board's projected administrative costs for
its first two years of implementing the program. Once the loan has
been expended and revenues from the program are sufficient to cover
the board's ongoing costs, the board shall repay, within five years,
the amount loaned, plus interest calculated at the rate earned by the
Pooled Money Investment Account.
(b) Not later than 30 days after the close of each month, the
investment manager shall place on file for public inspection during
business hours a report with respect to investment performance. The
investment manager shall report the following information, to the
extent applicable, to the board within 30 days following the end of
each month:
(1) The type of investment, name of the issuer, date of maturity,
and the par and dollar amount invested in each security, investment,
and money within the program fund.
(2) The weighted average maturity of the investments within the
program fund.
(3) Any amounts in the program fund that are under the management
of an investment manager.
(4) The market value as of the date of the report and the source
of this valuation for any security within the program fund.
(5) A description of the compliance with the statement of
investment policy.
(c) Moneys in the program fund may be invested or reinvested by
the Treasurer or may be invested in whole or in part under contract
with an investment manager, as determined by the board.
(d) The board shall annually prepare and adopt a written statement
of investment policy. The board shall consider the statement of
investment policy and any changes in the investment policy at a
public hearing. The board shall approve the investment management
entity or entities consistent with subdivision (c).
(e) Transfers may be made from the program fund to the
administrative fund for the purpose of paying operating costs
associated with administering the ABLE program trust and as required
by this chapter. All costs of administration of the ABLE program
trust shall be paid out of the administrative fund.
(f) All moneys paid by designated beneficiaries or eligible
individuals in connection with ABLE accounts shall be deposited as
received into the program fund, and shall be promptly invested and
accounted for separately. Deposits and interest thereon accumulated
on behalf of designated beneficiaries in the program fund of the ABLE
program trust may be used for qualified disability expenses.
(g) The board shall maintain separate accounting for each
designated beneficiary.
(h) Any designated beneficiary may, directly or indirectly, direct
the investment of any contributions to his or her ABLE account, or
any earnings thereon, no more than two times in any calendar year.
(i) The assets of the trust, including the program fund, shall at
all times be preserved, invested, and expended solely and only for
the purposes of the trust and shall be held in trust for the
designated beneficiaries and no property rights therein shall exist
in favor of the state. The assets shall not be transferred or used by
the state for any purposes other than the purposes of the trust and
consistent with the provisions of the federal ABLE Act.
SEC. 6. Section 4880 is added to the Welfare and Institutions
Code, to read:
4880. Notwithstanding any other law, moneys in, contributions to,
and any distribution for qualified disability expenses from, an ABLE
account, not to exceed one hundred thousand dollars ($100,000),
shall not count toward determining eligibility for a state or local
means-tested program.
SEC. 7. Section 4882 is added to the Welfare and Institutions
Code, to read:
4882. (a) The board shall adopt regulations as it deems necessary
to implement this chapter consistent with the federal Internal
Revenue Code and regulations issued pursuant to that code to ensure
that this program meets all criteria for federal tax-exempt benefits.
(b) The board may adopt regulations to implement this chapter as
emergency regulations in accordance with the rulemaking provisions of
the Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code). The adoption of the regulations shall be deemed to be an
emergency and necessary for the immediate preservation of the public
peace, health and safety, or general welfare.
SEC. 8. Section 4884 is added to the Welfare and Institutions
Code, to read:
4884. The board shall market this program to residents of the
State of California to the extent funds are available to do so.
SEC. 9. This act shall become operative only if Senate Bill 324 of
the 2015-16 Regular Session is enacted and takes effect on or before
January 1, 2016.