BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SJR 18|
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CONSENT
Bill No: SJR 18
Author: Pavley (D), et al.
Amended: As introduced
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 9-0, 5/9/12
AYES: Wolk, Dutton, DeSaulnier, Fuller, Hancock,
Hernandez, Kehoe, La Malfa, Liu
SUBJECT : Individuals with disabilities: tax exempt
accounts
SOURCE : California Association of Regional Centers
DIGEST : This resolution makes nine findings related to
the Achieving a Better Life Experience Act (ABLE Act) of
2011's benefits to disabled people and their family. Based
on these findings, this resolution urges the President and
the Congress of the United States to immediately enact the
ABLE Act of 2011.
ANALYSIS : Under federal law, Section 529 of the Internal
Revenue Code provides tax-exempt status to "qualified
tuition programs" (QTPs), commonly referred to as 529
Savings Plans. QTPs are programs established and
maintained by a state, an agency, or an eligible
educational institution to purchase tuition credits or make
cash contributions on behalf of designated beneficiaries.
No interest from a QTP is included in the gross income of a
contributor to, or a beneficiary of, a QTP unless such
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earnings exceed the qualified higher education expenses.
Any person, in addition to the beneficiary of the savings,
may make contributions to this savings account.
Contributions made to a 529 Savings Plans are not
deductible. California's 529 Savings Plan is the Golden
State Scholarshare Savings Trust.
The resolution makes the following legislative findings:
1. Many families are searching for a way to plan for the
future of a child with developmental disabilities, which
are costly to society and to families.
2. The ABLE Act, proposed in H.R. 3423 and S. 1872 and
currently debated by Congress, would create disability
savings accounts for individuals with developmental or
other disabilities and their families, as a way to save
for future needs with funds that could accrue interest
tax free.
3. The ABLE Act would give individuals with developmental
or other disabilities and their families an option for
saving for their future financial needs in a way that
supports their unique situation and makes it more
feasible to live full and productive lives in their
communities.
4. While many families are currently able to save for the
educational needs of children through "529" college
tuition plans, these plans do not fit the needs of
children with developmental or other disabilities.
5. Many families recognize that loved ones with
developmental or other disabilities may live for many
decades beyond the ability of the parents or other
family members to provide financial assistance and
support.
6. Many families also want to ensure the financial security
of family members who have the level of disability
required for Medicaid eligibility, but for now, are
managing to function without the use of those benefits
and state resources.
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7. The ABLE Act would create a savings fund for those with
developmental or other disabilities that could be drawn
upon for a variety of essential expenses, including
medical and dental care, education and employment
training and support, assistive technology, housing and
transportation, personal support services, and other
expenses for life necessities.
8. Savings accounts opened under the ABLE Act would provide
substantial flexibility to meet the specific needs of
the individual, with a broad array of allowable expenses
and no age limitations so that these funds can be used
whenever they are needed.
9. The flexibility in expenses would also allow families to
save with confidence even though they cannot always
predict how independent their child will become.
This resolution urges the President and the Congress of the
United States to immediately enact the ABLE Act of 2011.
Comments
Currently, there are no tax-benefited savings options
available for families to save for the needs of a person
with disabilities. The ABLE Act, pending in Congress,
authorizes the creation of tax-exempt accounts - similar to
529 Savings Plans - to benefit people with disabilities.
The ABLE Act defines a person with a disability as someone
who is blind or has a medically determinable physical or
mental impairment, which results in marked and severe
functional limitations, and which can be expected to result
in death or lasts for a continuous period of not less than
12 months.
The ABLE Act exempts federal taxation on the interest of
funds held in an ABLE account. Individual states determine
how the funds are treated for state taxation purposes.
Similar types of accounts, like college savings and IRAs,
have been exempted from state taxation. The ABLE Act
allows families and individuals to build savings for
certain expenses of a beneficiary with disabilities and has
no age requirement on beneficiaries.
Prior legislation
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SJR 31 (Pavley), Resolution Chapter 54, Statutes of 2010,
urges Congress to pass the ABLE Act of 2009, which is
nearly identical to the ABLE Act of 2011. The resolution
passed unanimously in the Senate Health Committee, Assembly
Human Services Committee, Senate Floor, and Assembly Floor,
and was chaptered in 2010. The ABLE Act of 2009 failed to
pass in Congress.
FISCAL EFFECT : Fiscal Com.: No
SUPPORT : (Verified 5/9/12)
California Association of Regional Centers (source)
American Federation of State, County and Municipal
Employees
Association of Regional Center Agencies
PAR 4 Kids' Sake
The Arc California
United Cerebral Palsy in California
AGB:kc:d 5/10/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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