Amended in Senate April 15, 2015

Senate BillNo. 324


Introduced by Senator Pavley

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(Coauthor: Senator Beall)

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(Principal coauthors: Assembly Members Irwin and Wilk)

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February 23, 2015


An act to add Sections 17140.4 and 23711.4 to the Revenue and Taxation Code, and to add Chapter 15 (commencing with Section 4875) to Division 4.5 of the Welfare and Institutions Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

SB 324, as amended, Pavley. Income taxation: savings plans: Qualified ABLE Program.

The Personal Income Tax Law and the Corporationbegin delete Incomeend delete 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 (ABLEbegin delete actend deletebegin insert Actend insert), 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 abegin delete qualified ABLE programend deletebegin insert Qualified ABLE Programend insert established and maintained by a state, as specified.

This bill would conform to these federal income tax law provisions relating to the ABLE Act under the Personal Income Tax Law and the Corporationbegin delete Incomeend delete Tax Law, as provided. The bill would also establish in state government abegin delete qualified ABLE programend deletebegin insert end insertbegin insertQualified ABLE Programend insert and the Qualified ABLE Fund for purposes of implementing the federal ABLE act. The bill would require the Treasurer to administer the program in compliance with the requirements of the federal ABLEbegin delete actend deletebegin insert Actend insert.

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

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

P2    1

SECTION 1.  

Section 17140.4 is added to the Revenue and
2Taxation Code
, to read:

3

17140.4.  

Section 529A of the Internal Revenue Code, relating
4to qualified ABLE programs,begin delete as enacted by Section 102 ofend deletebegin insert added
5by Section 102 of Division B ofend insert
Public Law 113-295, shall apply,
6except as otherwise provided.

7(a) Section 529A of the Internal Revenue Code is modified as
8follows:

9(1) By substituting the phrase “under this part and Part 11
10(commencing with Section 23001)” in lieu of the phrase “under
11this subtitle.”

12(2) By substituting “Article 2 (commencing with Section
1323731)” in lieu of “Section 511.”

14(b) A copy of the report required to be filed with the Secretary
15of the Treasury under Sectionbegin delete 529A(g) of the Internal Revenue
16Codeend delete
begin insert end insertbegin insert529A(d) of the Internal Revenue Code, relating to reports,end insert
17 shall be filed with the Franchise Tax Board at the same time and
18in the same manner as specified in that section.

19

SEC. 2.  

Section 23711.4 is added to the Revenue and Taxation
20Code
, to read:

21

23711.4.  

Section 529A of the Internal Revenue Code, relating
22to qualified ABLE programs,begin delete as enacted by Section 102 ofend deletebegin insert added
23by Section 102 of Division B ofend insert
Public Law 113-295, shall apply,
24except as otherwise provided.

25(a) Section 529A of the internal Revenue Code is modified as
26follows:

27(1) By substituting the phrase “under Part 10 (commencing with
28Section 17001) and this part” in lieu of the phrase “under this
29subtitle.”

P3    1(2) By substituting “Article 2 (commencing with Section
223731)” in lieu of “section 511.”

3(b) A copy of the report required to be filed with the Secretary
4of the Treasury under Sectionbegin delete 529A(g) of the Internal Revenue
5Codeend delete
begin insert end insertbegin insert529A(d) of the Internal Revenue Code, relating to reports,end insert
6 shall be filed with the Franchise Tax Board at the same time and
7in the same manner as specified in that section.

8

SEC. 3.  

Chapter 15 (commencing with Section 4875) is added
9to Division 4.5 of the Welfare and Institutions Code, to read:

10 

11Chapter  15. Qualified ABLE Program
12

 

13

4875.  

For purposes of this chapter:

14(a) “ABLE account” or “account” means the account an eligible
15individual makes contributions to pursuant to this chapter for the
16purpose of meeting the qualified disability expenses of the
17designated beneficiary of the account.

18(b) “ABLEbegin delete fund”end deletebegin insert Fundend insertbegin insertend insert or “fund” means the fund established
19by this chapter for purposes of implementing the federal ABLE
20act.

21(c) “Designated beneficiary” means the eligible individual who
22established an ABLE account and is the owner of the account.

23(d) “Eligible individual” means an individual who is eligible
24under the program for a taxable year if during that taxable year all
25of the following criteria are met:

26(1) The individual is entitled to benefits based on blindness or
27disability under Title II or XVI of the federal Social Security Act,
28and that blindness or disability occurred before the date on which
29the individual attained 26 years of age.

30(2) A disability certification, as defined in the federal ABLE
31act, with respect to the individual is filed pursuant to the
32requirements set forth in the federal ABLE act.

33(e) “Federal ABLE act” means the federal Stephen Beck Jr.,
34Achieving a Better Life Experience Act of 2014.

35(f) “Qualified ABLEbegin delete program”end deletebegin insert Programend insertbegin insertend insert or “program” means
36the program established by this chapter to implement the federal
37ABLE act pursuant to Section 529A of the Internal Revenue Code.

38(g) “Qualified disability expenses” means any expenses related
39to the eligible individual’s blindness or disability that are made
40for the benefit of an eligible individual who is the designated
P4    1beneficiary, including expenses related to education, housing,
2transportation, employment training and support, assistive
3technology and personal support services, health, prevention and
4wellness, financial management and administrative services, legal
5fees, expenses for oversight and monitoring, funeral and burial
6expenses, and other expenses, which are approved by the Secretary
7of the Treasury under regulations and consistent with the purposes
8of the federal ABLE act.

9

4876.  

(a) There is hereby established in state government a
10begin delete qualified ABLE programend deletebegin insert Qualified ABLE Programend insert and the
11Qualified ABLE Fund for purposes of implementing the federal
12ABLE act pursuant to Section 529A of the Internal Revenue Code.

13(b) Thebegin delete qualified ABLE programend deletebegin insert Qualified ABLE Programend insert
14 shall be administered by the Treasurer, who shall be responsible
15to ensure that the program is administered in compliance with the
16requirements of the federal ABLE act.

17

4877.  

Under the program, a person may make contributions
18for a taxable year, for the benefit of an individual who is an eligible
19individual for that taxable year, to an ABLE account that is
20established for the purpose of meeting the qualified disability
21expenses of the designated beneficiary of the account, if all of the
22following criteria are met:

23(a) The designated beneficiary is limited to one ABLE account
24for purposes of this chapter.

25(b) The ABLE account is established only for a designated
26beneficiary who is a resident of this state.

27

4878.  

The Treasurer may adopt regulations to implement this
28chapter.

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29

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Notwithstanding any other law, moneys in an ABLE
30account, not to exceed one hundred thousand dollars ($100,000)
31shall not count toward determining eligibility for the Medi-Cal
32program pursuant to Chapter 7 (commencing with Section 14000)
33of Part 3 of Division 9.

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