Amended in Senate June 22, 2016

Amended in Assembly February 29, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 1553

Introduced by Assembly Member Irwin

January 4, 2016

An act to amend Sections 4875 and 4877 of the Welfare and Institutions Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

AB 1553, as amended, Irwin. Savings plans: qualified ABLE program.

Existing federal law, the Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE Act), 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.

Existing law conforms to these federal income tax law provisions relating to the ABLE Act under the Personal Income Tax Law and the Corporation Tax Law, as provided. begin insert Existing law defines “eligible individual” for these purposes. end insert Existing law establishes in state government the ABLE program trust for purposes of implementing the federal ABLE Act. Existing law also establishes the ABLE Act Board and authorizes the board to adopt regulations to implement the program.

begin insert

The existing State Contract Act, in connection with contracts entered into by any state agency for services to be rendered to the state, prohibits a person, firm, or subsidiary thereof that has been awarded a consulting services contract from submitting a bid for, or being awarded a contract for, the provision of services, the procurement of goods or supplies, or any other related action that is required, suggested, or otherwise deemed appropriate in the end product of the consulting services contract. A willful violation of these provisions is a misdemeanor, under other provisions.

end insert

This bill would begin delete authorize the ABLE Act Board to enter into a multistate contract with an account servicer in order to implement these provisions and to enter into a long-term contract with an account servicer, as provided. end delete begin insert modify the definition of “eligible individual.” The bill would also exempt the ABLE Act Board from the above prohibition in the State Contract Act for a contract with an account servicer but would require such a contract to be publicly disclosed in a manner specified by the board prior to entering into the contract. end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 4875 of the Welfare and Institutions Code
is amended to read:

4875.  

For purposes of this chapter:

(a) “ABLE account” or “account” means the account established
and owned by a designated beneficiary pursuant to this chapter
for the purpose of meeting the qualified disability expenses of the
designated beneficiary of the account.

(b) “Administrative fund” means the fund used to administer
this chapter.

(c) “Board” means the California ABLE Act Board established
under this chapter.

(d) “California ABLE Program Trust” or “ABLE program trust”
means the trust created pursuant to this chapter.

(e) “Designated beneficiary” means the eligible individual who
established an ABLE account and is the owner of the account.

(f) “Eligible individual” means an individual who is eligible
under the program for a taxable year if begin insert blindness or disability
occurred before the date on which the individual attained 26 years
of age, and end insert during that taxable begin delete year: end delete begin insert year either of the following
criteria are satisfied: end insert

(1)  begin delete the end delete begin insert The end insert individual is entitled to benefits based on blindness
or disability under Title II or XVI of the federal Social Security
Act, and that blindness or disability occurred before the date on
which the individual attained 26 years of begin delete age; or end delete begin insert age. end insert

(2)  begin delete a end delete begin insert A end insert disability certification, as defined in the federal ABLE
Act, with respect to the individual is filed pursuant to the
requirements set forth in the federal ABLE Act.

(g) “Federal ABLE Act” means the federal Stephen Beck, Jr.,
Achieving a Better Life Experience Act of 2014.

(h) “Investment management” means the functions performed
by a manager contracted to perform functions delegated by the
board.

(i) “Investment manager” means a manager contracted to
perform functions delegated by the board.

(j) “Program fund” means the program fund established by this
chapter, which shall be held as a separate fund within the California
ABLE Program Trust.

(k) “Qualified ABLE Program” or “program” means the program
established by this chapter to implement the federal ABLE Act
pursuant to Section 529A of the Internal Revenue Code.

(l) “Qualified disability expenses” means any expenses related
to the eligible individual’s blindness or disability that are made
for the benefit of an eligible individual who is the designated
beneficiary, including the following expenses: 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 other expenses, which are approved by the Secretary
of the Treasury under regulations and consistent with the purposes
of the federal ABLE Act.

SEC. 2.  

Section 4877 of the Welfare and Institutions Code is
amended 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)  begin insert (A) end insert begin insert   end insert 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.

begin insert

(B) Subdivision (a) of Section 10365.5 of the Public Contract
Code shall not apply to a contract with an account servicer. Any
contract with an account servicer that would have been prohibited
by that subdivision shall be publicly disclosed in a manner specified
by the board prior to entering into the contract.

end insert

(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.

begin delete

(d) (1) The board may enter into a multistate contract with an
account servicer in order to implement this chapter.

end delete begin delete

(2) The board may enter into a long-term contract with an
account servicer that allows the account servicer to recoup costs
from administering ABLE accounts in the first years of
administration.

end delete begin delete

(3) Subdivision (a) of Section 10365.5 of the Public Contract
Code does not apply to this subdivision.

end delete begin delete

(e)

end delete

begin insert (d) end insert  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.