Bill Text: CA SB324 | 2015-2016 | Regular Session | Chaptered
Bill Title: Income taxation: savings plans: Qualified ABLE Program.
Spectrum: Slight Partisan Bill (Democrat 4-2)
Status: (Passed) 2015-10-11 - Chaptered by Secretary of State. Chapter 796, Statutes of 2015. [SB324 Detail]
Download: California-2015-SB324-Chaptered.html
BILL NUMBER: SB 324 CHAPTERED
BILL TEXT
CHAPTER 796
FILED WITH SECRETARY OF STATE OCTOBER 11, 2015
APPROVED BY GOVERNOR OCTOBER 11, 2015
PASSED THE SENATE SEPTEMBER 10, 2015
PASSED THE ASSEMBLY SEPTEMBER 8, 2015
AMENDED IN ASSEMBLY SEPTEMBER 4, 2015
AMENDED IN ASSEMBLY AUGUST 17, 2015
AMENDED IN ASSEMBLY JULY 15, 2015
AMENDED IN SENATE APRIL 15, 2015
INTRODUCED BY Senator Pavley
(Principal coauthors: Assembly Members Irwin and Wilk)
(Coauthor: Senator Beall)
(Coauthors: Assembly Members Dodd and Kim)
FEBRUARY 23, 2015
An act to add Section 17140.4 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, Pavley. 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, 2014, 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, for taxable years beginning on or after January 1,
2016, would conform to these federal income tax law provisions
relating to the ABLE Act under the Personal Income Tax Law, as
provided. The bill would create the ABLE Act Board and would require
the board provide an annual listing of distributions to individuals
that have an interest in an ABLE account to the Franchise Tax Board,
as provided.
This bill would provide that it will only become effective if AB
449 is enacted and becomes effective.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17140.4 is added to the Revenue and Taxation
Code, to read:
17140.4. 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 this part and Part 11
(commencing with Section 23001)" 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. 2. Chapter 15 (commencing with Section 4875) is added to
Division 4.5 of the Welfare and Institutions Code, to read:
CHAPTER 15. QUALIFIED ABLE PROGRAM
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 during that taxable year both
of the following criteria are met:
(1) The 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 age.
(2) A 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 expenses related to 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.
4876. There is hereby created the California ABLE Act Board that
consists of the Treasurer, the Director of Finance, the Controller,
the Director of Developmental Services, the Chairperson of the State
Council on Developmental Disabilities, the Director of
Rehabilitation, and the Chair of the State Independent Living
Council, or their designees. The Treasurer shall serve as chair of
the board.
4879. (a) Under the program, a person may make contributions for
a taxable year, for the benefit of an individual who is an eligible
individual for that taxable year, to an ABLE account that is
established for the purpose of meeting the qualified disability
expenses of the designated beneficiary of the account if both of the
following criteria are met:
(1) The designated beneficiary is limited to one ABLE account for
purposes of this chapter.
(2) The ABLE account is established only for a designated
beneficiary who is a resident of this state.
(b) A contribution shall not be accepted if either of the
following occurs:
(1) The contribution is not in cash.
(2) Except in the case of contributions under Section 529A(c)(1)
(C) of the Internal Revenue Code, relating to change in designated
beneficiaries or programs, the contribution to an ABLE account would
result in aggregate contributions from all contributors to the ABLE
account for the taxable year exceeding the amount in effect under
Section 2503(b) of the Internal Revenue Code, relating to exclusion
from gifts, for the calendar year in which the taxable year begins.
(c) The designated beneficiary shall retain ownership of all
contributions made to the designated beneficiary's ABLE account to
the date of utilization for qualified disability expenses, and all
interest derived from the investment of the contributions to the
designated beneficiary's ABLE account shall be deemed to be held in
the ABLE program trust for the benefit of the designated beneficiary.
Neither the contributions, nor any interest derived therefrom, may
be pledged as collateral for any loan.
(d) The board shall develop adequate safeguards to prevent
aggregate contributions on behalf of a designated beneficiary in
excess of the maximum contribution limits necessary to provide for
the qualified disability expenses of the designated beneficiary. For
purposes of this subdivision, aggregate contributions include
contributions under any prior qualified ABLE program of any state or
agency or instrumentality thereof.
4881. (a) The board shall provide an annual listing of
distributions to individuals with respect to an interest in an ABLE
account to the Franchise Tax Board at a time and in a manner and form
as specified by the Franchise Tax Board. The taxpayers'
identification numbers obtained in connection with an ABLE account
shall be used exclusively for state and federal tax administration
purposes.
(b) The board shall make a report to the appropriate individual of
any distribution to any individual with respect to an interest in an
ABLE account, at a time and in a form and manner as required by the
Franchise Tax Board.
(c) The board shall report annually to each designated beneficiary
all of the following:
(1) The value of the designated beneficiary's account.
(2) The interest earned thereon.
(3) The rate of return of the investments in the designated
beneficiary's account for that reporting period.
(4) Information on investments and qualified disability expenses
that designated beneficiaries can use to set savings goals and
contribution amounts.
(d) The board shall provide a means for designated beneficiaries
to express concerns or comments regarding the ABLE program trust and
any information required to be reported by this section.
4883. This act shall be construed liberally in order to
effectuate its legislative intent. The purposes of this act and all
of its provisions with respect to powers granted shall be broadly
interpreted to effectuate the intent and purposes of the federal ABLE
Act and not as a limitation of those powers.
SEC. 3. This act shall only become effective if Assembly Bill 449
of the 2015-16 Regular Session is enacted and becomes effective.
