Bill Text: IA SF490 | 2015-2016 | 86th General Assembly | Introduced
Bill Title: A bill for an act creating an Iowa ABLE savings plan trust, providing for participation in another state's qualified ABLE program, providing deductions and exclusions from the individual income tax and inheritance tax relating to the trust or program, and including implementation and applicability provisions. (Formerly SSB 1210 and SF 439.)
Spectrum: Committee Bill
Status: (Introduced - Dead) 2015-06-05 - Referred to Ways & Means. S.J. 1122. [SF490 Detail]
Download: Iowa-2015-SF490-Introduced.html
Senate File 490 - Introduced SENATE FILE BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SF 439) (SUCCESSOR TO SSB 1210) A BILL FOR 1 An Act creating an Iowa ABLE savings plan trust, providing for 2 participation in another state's qualified ABLE program, 3 providing deductions and exclusions from the individual 4 income tax and inheritance tax relating to the trust or 5 program, and including implementation and applicability 6 provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 1660SZ (2) 86 mm/sc PAG LIN 1 1 Section 1. NEW SECTION. 12I.1 Purpose and definitions. 1 2 1. The general assembly finds that the general welfare 1 3 and well=being of the state are directly related to the 1 4 health, maintenance, independence, and quality of life of its 1 5 disabled residents, and that a vital and valid public purpose 1 6 is served by the creation and implementation of programs that 1 7 encourage and make possible savings to secure funding for 1 8 disability=related expenses on behalf of individuals with 1 9 disabilities that will supplement, but not supplant, other 1 10 benefits provided by various federal, state, and private 1 11 sources. The creation of the means of encouragement for 1 12 citizens to invest in such a program represents the carrying 1 13 out of a vital and valid public purpose. In order to make 1 14 available to the citizens of the state an opportunity to fund 1 15 future disability=related expenses of individuals, it is 1 16 necessary that a public trust be established in which moneys 1 17 may be invested for payment of future disability=related 1 18 expenses of an individual. 1 19 2. As used in this chapter, unless the context otherwise 1 20 requires: 1 21 a. "Account balance limit" means the maximum allowable 1 22 aggregate balance of an account established for a designated 1 23 beneficiary. Account earnings, if any, are included in the 1 24 account balance limit. 1 25 b. "Account owner" means an individual who enters into a 1 26 participation agreement under this chapter for the payment 1 27 of qualified disability expenses on behalf of a designated 1 28 beneficiary. 1 29 c. "Contracting state" means the same as defined in section 1 30 529A of the Internal Revenue Code. 1 31 d. "Designated beneficiary" means an individual who is a 1 32 resident of this state or a resident of a contracting state and 1 33 who meets the definition of "eligible individual" in section 1 34 529A of the Internal Revenue Code. 1 35 e. "Internal Revenue Code" means the Internal Revenue Code 2 1 of 1986, as amended, and regulations promulgated thereunder. 2 2 f. "Iowa ABLE savings plan trust" or "trust" means the trust 2 3 created under section 12I.2. 2 4 g. "Participation agreement" means an agreement between the 2 5 account owner and the trust entered into under this chapter. 2 6 h. "Qualified ABLE program" means the same as defined in 2 7 section 529A of the Internal Revenue Code. 2 8 i. "Qualified disability expenses" means the same as defined 2 9 in section 529A of the Internal Revenue Code. 2 10 j. "Resident" shall be defined by rules adopted by the 2 11 treasurer of state. The rules shall determine residency in 2 12 such manner as may be required or permitted under section 2 13 529A of the Internal Revenue Code, or, in the absence of any 2 14 guidance under federal law, as the treasurer of state deems 2 15 advisable for the purpose of satisfying the requirements of 2 16 section 529A of the Internal Revenue Code. 2 17 Sec. 2. NEW SECTION. 12I.2 Creation of Iowa ABLE savings 2 18 plan trust. 2 19 An Iowa ABLE savings plan trust is created. The treasurer of 2 20 state is the trustee of the trust, and has all powers necessary 2 21 to carry out and effectuate the purposes, objectives, and 2 22 provisions of this chapter pertaining to the trust, including 2 23 the power to do all of the following: 2 24 1. Make and enter into contracts necessary for the 2 25 administration of the trust created under this chapter. 2 26 2. Enter into agreements with this state or any other 2 27 state, or any federal or other state agency, or other entity as 2 28 required to implement this chapter. 2 29 3. Carry out the duties and obligations of the trust 2 30 pursuant to this chapter. 2 31 4. Accept any grants, gifts, legislative appropriations, 2 32 and other moneys from the state, any unit of federal, state, or 2 33 local government, or any other person, firm, partnership, or 2 34 corporation which the treasurer of state shall deposit into the 2 35 administrative fund or program fund. 3 1 5. Participate in any federal, state, or local governmental 3 2 program for the benefit of the trust. 3 3 6. Procure insurance against any loss in connection with the 3 4 property, assets, or activities of the trust. 3 5 7. Enter into participation agreements with account owners. 3 6 8. Make payments to designated beneficiaries pursuant to 3 7 participation agreements. 3 8 9. Make refunds to account owners upon the termination 3 9 of participation agreements, and partial nonqualified 3 10 distributions to account owners, pursuant to this chapter and 3 11 the limitations and restrictions set forth in this chapter. 3 12 10. Invest moneys from the program fund in any investments 3 13 that are determined by the treasurer of state to be 3 14 appropriate. 3 15 11. Engage investment advisors, if necessary, to assist in 3 16 the investment of trust assets. 3 17 12. Contract for goods and services and engage personnel 3 18 as necessary, including consultants, actuaries, managers, 3 19 legal counsel, and auditors for the purpose of rendering 3 20 professional, managerial, and technical assistance and advice 3 21 to the treasurer of state regarding trust administration and 3 22 operation. 3 23 13. Establish, impose, and collect administrative fees 3 24 and charges in connection with transactions of the trust, and 3 25 provide for reasonable service charges, including penalties for 3 26 cancellations and late payments with respect to participation 3 27 agreements. 3 28 14. Administer the funds of the trust. 3 29 15. Prepare and file reports and notices. 3 30 16. Enter into agreements with contracting states to permit 3 31 residents of the contracting state to participate in the Iowa 3 32 ABLE savings plan trust. 3 33 17. Adopt rules pursuant to chapter 17A for the 3 34 administration of this chapter. 3 35 Sec. 3. NEW SECTION. 12I.3 Participation agreements for 4 1 trust. 4 2 The trust may enter into participation agreements with 4 3 account owners pursuant to the following terms and agreements: 4 4 1. a. Unless otherwise permitted under section 529A of the 4 5 Internal Revenue Code, the treasurer of state shall allow only 4 6 one participation agreement per designated beneficiary. 4 7 b. Unless otherwise permitted under section 529A of the 4 8 Internal Revenue Code, the account owner must also be the 4 9 designated beneficiary of the account. However, a trustee or 4 10 legal guardian may be designated as custodian of an account for 4 11 a designated beneficiary who is a minor or who lacks capacity 4 12 to enter into a participation agreement if such designation is 4 13 not prohibited under section 529A of the Internal Revenue Code. 4 14 c. The treasurer of state shall set an annual contribution 4 15 limit and account balance limit to maintain compliance with 4 16 section 529A of the Internal Revenue Code. A contribution 4 17 shall not be permitted to the extent it exceeds the annual 4 18 contribution limit or causes the aggregate balance of the 4 19 account established for the designated beneficiary to exceed 4 20 the applicable account balance limit. 4 21 d. The maximum amount that may be deducted for Iowa income 4 22 tax purposes shall not exceed the maximum deductible amount 4 23 determined for the year pursuant to section 12D.3, subsection 4 24 1, paragraph "a". This maximum amount applies per designated 4 25 beneficiary that is a resident of this state per year. 4 26 e. Participation agreements may be amended to provide 4 27 for adjusted levels of contributions based upon changed 4 28 circumstances or changes in disability=related expenses. 4 29 f. Any person may make contributions pursuant to a 4 30 participation agreement on behalf of a designated beneficiary 4 31 under rules adopted by the treasurer of state. 4 32 2. The execution of a participation agreement by the trust 4 33 shall not guarantee in any way that future disability=related 4 34 expenses will be equal to projections and estimates provided by 4 35 the trust or that the account owner or designated beneficiary 5 1 is guaranteed any of the following: 5 2 a. A return of principal. 5 3 b. A rate of interest or other return from the trust. 5 4 c. Payment of interest or other return from the trust. 5 5 3. a. A designated beneficiary under a participation 5 6 agreement may be changed as permitted under rules adopted by 5 7 the treasurer of state upon written request of the account 5 8 owner as long as such change would be permitted by section 529A 5 9 of the Internal Revenue Code. 5 10 b. Participation agreements may otherwise be freely amended 5 11 throughout their terms in order to enable account owners to 5 12 increase or decrease the level of participation, change the 5 13 designated beneficiary, and carry out similar matters as 5 14 authorized by rule. 5 15 4. Each participation agreement shall provide that the 5 16 participation agreement may be canceled upon the terms and 5 17 conditions, and upon payment of applicable fees and costs set 5 18 forth and contained in the rules adopted by the treasurer of 5 19 state. 5 20 Sec. 4. NEW SECTION. 12I.4 Program and administrative funds 5 21 == investment and payment. 5 22 1. a. The treasurer of state shall segregate moneys 5 23 received by the trust into two funds: the program fund and the 5 24 administrative fund. 5 25 b. All moneys paid by account owners or other persons 5 26 on behalf of a designated beneficiary in connection with 5 27 participation agreements shall be deposited as received into 5 28 separate accounts for each designated beneficiary within the 5 29 program fund. 5 30 c. Contributions to the trust made on behalf of designated 5 31 beneficiaries may only be made in the form of cash. 5 32 d. An account owner or designated beneficiary is 5 33 not permitted to provide investment direction regarding 5 34 contributions or earnings held by the trust. 5 35 2. Moneys accrued by account owners in the program fund 6 1 of the trust may be used for payments of qualified disability 6 2 expenses. 6 3 3. Moneys in the account of a designated beneficiary may 6 4 be claimed by the Iowa Medicaid program as provided in section 6 5 529A(f) of the Internal Revenue Code and subject to limitations 6 6 imposed by the treasurer of state. 6 7 4. The trust shall comply with Pub. L. No. 113=295, {103, 6 8 regarding treatment of ABLE accounts under certain federal 6 9 programs. 6 10 Sec. 5. NEW SECTION. 12I.5 Cancellation of agreements. 6 11 An account owner may cancel a participation agreement at 6 12 will. Upon cancellation of a participation agreement, an 6 13 account owner shall be entitled to the return of the account 6 14 owner's account balance. 6 15 Sec. 6. NEW SECTION. 12I.6 Repayment and ownership of 6 16 payments and investment income == transfer of ownership rights. 6 17 1. a. An account owner retains ownership of all 6 18 contributions made on behalf of a designated beneficiary under 6 19 a participation agreement up to the date of utilization for 6 20 payment of qualified disability expenses of the designated 6 21 beneficiary. 6 22 b. All income derived from the investment of the 6 23 contributions made on behalf of a designated beneficiary shall 6 24 be considered to be held in trust for the benefit of the 6 25 designated beneficiary. 6 26 2. In the event the trust is terminated prior to payment of 6 27 qualified disability expenses for the designated beneficiary, 6 28 the account owner is entitled to a refund of the account 6 29 owner's account balance. 6 30 3. Any amounts which may be paid to any person or persons 6 31 pursuant to the Iowa ABLE savings plan trust but which are not 6 32 listed in this section are owned by the trust. 6 33 4. An account owner may transfer ownership rights to 6 34 another designated beneficiary, including a gift of the 6 35 ownership rights to a designated beneficiary who is a minor, in 7 1 accordance with rules adopted by the treasurer of state and the 7 2 terms of the participation agreement, so long as the transfer 7 3 would be permitted by section 529A of the Internal Revenue 7 4 Code. 7 5 5. An account owner or designated beneficiary shall not be 7 6 entitled to utilize any interest in the trust as security for 7 7 a loan. 7 8 Sec. 7. NEW SECTION. 12I.7 Reports == annual audited 7 9 financial report == reports under federal law. 7 10 1. a. The treasurer of state shall submit an annual 7 11 audited financial report, prepared in accordance with generally 7 12 accepted accounting principles, on the operations of the trust 7 13 by November 1 to the governor and the general assembly. 7 14 b. The annual audit shall be made either by the auditor 7 15 of state or by an independent certified public accountant 7 16 designated by the auditor of state and shall include direct and 7 17 indirect costs attributable to the use of outside consultants, 7 18 independent contractors, and any other persons who are not 7 19 state employees. 7 20 2. The annual audit shall be supplemented by all of the 7 21 following information prepared by the treasurer of state: 7 22 a. Any related studies or evaluations prepared in the 7 23 preceding year. 7 24 b. A summary of the benefits provided by the trust, 7 25 including the number of account owners and designated 7 26 beneficiaries in the trust, or, if the trust has caused this 7 27 state to become a contracting state pursuant to section 12I.10, 7 28 a summary of the benefits provided to Iowa residents by the 7 29 contracted qualified ABLE program, including the number of 7 30 account owners and designated beneficiaries in the contracted 7 31 qualified ABLE program who are Iowa residents. 7 32 c. Any other information deemed relevant by the treasurer of 7 33 state in order to make a full, fair, and effective disclosure 7 34 of the operations of the trust or the contracted qualified ABLE 7 35 program if applicable. 8 1 3. The treasurer of state shall prepare and submit to the 8 2 secretary of the United States treasury or other required party 8 3 any reports, notices, or statements required under section 529A 8 4 of the Internal Revenue Code. 8 5 Sec. 8. NEW SECTION. 12I.8 Tax considerations. 8 6 1. For federal income tax purposes, the Iowa ABLE savings 8 7 plan trust shall be considered a qualified ABLE program exempt 8 8 from taxation pursuant to section 529A of the Internal Revenue 8 9 Code and shall be operated so that it meets the requirements of 8 10 section 529A of the Internal Revenue Code. 8 11 2. State income tax treatment of the Iowa ABLE savings plan 8 12 trust shall be as provided in section 422.7, subsections 34 and 8 13 34A. 8 14 3. State inheritance tax treatment of interests in Iowa ABLE 8 15 savings plans shall be as provided in section 450.4, subsection 8 16 9. 8 17 Sec. 9. NEW SECTION. 12I.9 Property rights to assets in 8 18 trust. 8 19 1. The assets of the trust shall at all times be preserved, 8 20 invested, and expended solely and only for the purposes of the 8 21 trust and shall be held in trust for the account owners and 8 22 designated beneficiaries. 8 23 2. Except as provided in section 12I.4, subsection 3, no 8 24 property rights in the trust shall exist in favor of the state. 8 25 3. Except as provided in section 12I.4, subsection 3, the 8 26 assets of the trust shall not be transferred or used by the 8 27 state for any purposes other than the purposes of the trust. 8 28 Sec. 10. NEW SECTION. 12I.10 Implementation as a 8 29 contracting state ==== tax considerations. 8 30 1. The general assembly acknowledges that section 529A of 8 31 the Internal Revenue Code permits access to qualified ABLE 8 32 programs by residents of a state without such a program. The 8 33 general assembly finds that becoming a contracting state may 8 34 accomplish the public purpose set forth in section 12I.1, 8 35 subsection 1, in the same manner as if the qualified ABLE 9 1 program under the Iowa ABLE savings plan trust were to be 9 2 implemented and administered by this state. To that end, 9 3 the treasurer of state, as trustee of the trust, may defer 9 4 implementation of the qualified ABLE program under the trust 9 5 and alternatively cause this state to become a contracting 9 6 state by entering into an agreement with another state with a 9 7 qualified ABLE program to provide Iowa residents access to that 9 8 state's qualified ABLE program. The trust shall not enter into 9 9 an agreement pursuant to this section unless the treasurer, 9 10 as trustee of the trust, determines that all of the following 9 11 requirements are satisfied: 9 12 a. The program is a qualified ABLE program. 9 13 b. The qualified ABLE program provides comparable benefits 9 14 and protections to Iowa residents as would be provided under 9 15 the Iowa ABLE savings plan trust. 9 16 c. That entering into an agreement for access to the 9 17 qualified ABLE program would not result in increased costs to 9 18 the state or to account owners and designated beneficiaries as 9 19 compared to the costs of implementing and administering the 9 20 qualified ABLE program under the Iowa ABLE savings plan trust. 9 21 d. The qualified ABLE program will be audited annually by 9 22 an independent certified public accountant or by the state 9 23 auditor, or similar public official, of the state that has 9 24 implemented the qualified ABLE program. 9 25 e. The qualified ABLE program will provide information to 9 26 the treasurer of state as trustee of the trust so as to allow 9 27 the trustee to fulfill the reporting requirements in section 9 28 12I.7. 9 29 2. a. The maximum amount that may be deducted for Iowa 9 30 income tax purposes for contributions to the qualified ABLE 9 31 program with which the state has contracted pursuant to 9 32 this section shall not exceed the maximum deductible amount 9 33 determined for the year pursuant to section 12D.3, subsection 9 34 1, paragraph "a". This maximum amount applies per designated 9 35 beneficiary that is a resident of this state per year. 10 1 b. State income tax treatment of the qualified ABLE program 10 2 with which the state has contracted pursuant to this section 10 3 shall be as provided in section 422.7, subsections 34 and 34A. 10 4 3. State inheritance tax treatment of interests in the 10 5 qualified ABLE program with which the state has contracted 10 6 pursuant to this section shall be as provided in section 450.4, 10 7 subsection 9. 10 8 Sec. 11. NEW SECTION. 12I.11 Construction. 10 9 This chapter shall be construed liberally in order to 10 10 effectuate its purpose. 10 11 Sec. 12. Section 422.7, Code 2015, is amended by adding the 10 12 following new subsections: 10 13 NEW SUBSECTION. 34. a. Subtract the amount contributed 10 14 during the tax year on behalf of a designated beneficiary 10 15 that is a resident of this state to the Iowa ABLE savings 10 16 plan trust or to the qualified ABLE program with which the 10 17 state has contracted pursuant to section 12I.10, not to exceed 10 18 the maximum contribution level established in section 12I.3, 10 19 subsection 1, paragraph "d", or section 12I.10, subsection 2, 10 20 paragraph "a", as applicable. 10 21 b. Add the amount resulting from the cancellation of a 10 22 participation agreement refunded to the taxpayer as an account 10 23 owner in the Iowa ABLE savings plan trust or the qualified 10 24 ABLE program with which the state has contracted pursuant to 10 25 section 12I.10 to the extent previously deducted pursuant 10 26 to this subsection by the taxpayer or any other person as a 10 27 contribution to the trust or qualified ABLE program. 10 28 c. Add the amount resulting from a withdrawal made by a 10 29 taxpayer from the Iowa ABLE savings plan trust or the qualified 10 30 ABLE program with which the state has contracted pursuant to 10 31 section 12I.10 for purposes other than the payment of qualified 10 32 disability expenses to the extent previously deducted pursuant 10 33 to this subsection by the taxpayer or any other person as a 10 34 contribution to the trust or qualified ABLE program. 10 35 NEW SUBSECTION. 34A. Subtract, to the extent included, 11 1 income from interest and earnings received from the Iowa ABLE 11 2 savings plan trust created in chapter 12I, or received by a 11 3 resident account owner from a qualified ABLE program with which 11 4 the state has contracted pursuant to section 12I.10. 11 5 Sec. 13. Section 450.4, Code 2015, is amended by adding the 11 6 following new subsection: 11 7 NEW SUBSECTION. 9. On the value of any interest in the Iowa 11 8 ABLE savings plan trust created in chapter 12I, or any interest 11 9 held by a resident account owner in a qualified ABLE program 11 10 with which the state has contracted pursuant to section 12I.10. 11 11 Sec. 14. CONTINGENT IMPLEMENTATION. The implementation of 11 12 this chapter is subject to an appropriation with the stated 11 13 purpose of the Iowa ABLE Savings Plan Trust. 11 14 Sec. 15. APPLICABILITY. The section of this Act amending 11 15 section 450.4 applies to estates of decedents dying on or after 11 16 January 1, 2016. 11 17 Sec. 16. APPLICABILITY. The section of this Act amending 11 18 section 422.7 applies to tax years beginning on or after 11 19 January 1, 2016. 11 20 EXPLANATION 11 21 The inclusion of this explanation does not constitute agreement with 11 22 the explanation's substance by the members of the general assembly. 11 23 This bill creates an Iowa ABLE (Achieving A Better Life 11 24 Experience) savings plan trust and provides for various Iowa 11 25 individual income tax and inheritance tax benefits. 11 26 BACKGROUND. On December 19, 2014, the federal Achieving 11 27 A Better Life Experience Act of 2014 (ABLE Act) was enacted 11 28 as part of the federal Tax Increase Prevention Act of 2014 11 29 (Pub. L. No. 113=295). The ABLE Act allows states to create 11 30 programs to assist individuals in saving private funds for 11 31 the purpose of supporting individuals with disabilities. 11 32 Qualifying state programs will allow for the establishment 11 33 of accounts into which eligible disabled individuals or 11 34 others may make contributions for the payment of future 11 35 disability=related expenses of the eligible disabled 12 1 individual. Funds and earnings in accounts established 12 2 under qualifying state programs are afforded federal benefits 12 3 in certain circumstances, including federal tax exemption, 12 4 bankruptcy protection, and exclusion from consideration under 12 5 certain means=tested programs, such as Medicaid or supplemental 12 6 security income. 12 7 IOWA ABLE SAVINGS PLAN TRUST. The bill creates the Iowa 12 8 ABLE savings plan trust (trust) under the treasurer of state 12 9 (state treasurer) that will meet the requirements of {529A of 12 10 the Internal Revenue Code (federal ABLE program). The state 12 11 treasurer is the trustee of the trust and has numerous powers, 12 12 as specified in the bill, for the purpose of carrying out the 12 13 purpose of the trust. 12 14 The trust is authorized to enter into participation 12 15 agreements with individuals for the payment of future qualified 12 16 disability expenses, and to enter into contracts with other 12 17 states (contracting state) to allow these states' residents 12 18 access to the Iowa ABLE program. "Qualified disability 12 19 expenses" means the same as defined under the federal ABLE 12 20 program, which generally defines the term to include expenses 12 21 related to a designated beneficiary's education, housing, 12 22 transportation, employment training and support, assistive 12 23 technology and personal support services, health, prevention 12 24 and wellness, financial management and administrative services, 12 25 legal fees, expenses for oversight and monitoring, funeral and 12 26 burial expenses, and other expenses approved by the secretary 12 27 of the United States treasury (secretary). 12 28 Unless otherwise allowed under the federal ABLE program, 12 29 the person with whom the state treasurer enters into a 12 30 participation agreement must be both the account owner and 12 31 designated beneficiary. However, the bill allows a trustee 12 32 or legal guardian to be designated as custodian of an account 12 33 for a designated beneficiary who is a minor or who lacks 12 34 capacity to enter into a participation agreement, provided such 12 35 designation would be allowed under the federal ABLE program. 13 1 "Designated beneficiary" is defined in the bill as a person who 13 2 is a resident of Iowa or a contracting state and who qualifies 13 3 as an eligible individual under the federal ABLE program, which 13 4 includes individuals who are entitled to benefits based on 13 5 blindness or disability under Title II (disability insurance) 13 6 or Title XVI (supplemental security income) of the federal 13 7 Social Security Act if such blindness or disability occurred 13 8 before attaining 26 years of age, and if such individual files 13 9 a disability certification with the secretary. 13 10 The bill requires the state treasurer to maintain a separate 13 11 account in the trust for each designated beneficiary of a 13 12 participation agreement. Unless otherwise allowed under the 13 13 federal ABLE program, only one participation agreement shall be 13 14 allowed per designated beneficiary. Any person is allowed to 13 15 make contributions in the form of cash to an account on behalf 13 16 of a designated beneficiary. The trust is required to maintain 13 17 limits on the annual contributions to an account, and the 13 18 aggregate balance in an account, matching those set forth in 13 19 the federal ABLE program, which prohibits annual contributions 13 20 to an account from exceeding the annual gift tax exclusion 13 21 amount ($14,000 for 2015), and prohibits an aggregate account 13 22 balance from exceeding the limit set by a state under its 13 23 qualified tuition program (currently $320,000 for Iowa). 13 24 The bill also permits the treasurer of state to defer 13 25 implementation of the Iowa ABLE program and alternatively enter 13 26 into an agreement with another state's qualified ABLE program 13 27 to provide Iowa residents access to that state's program, if 13 28 certain requirements specified in the bill are satisfied. 13 29 The bill provides other various terms and conditions for 13 30 participation agreements, use and segregation of trust funds, 13 31 cancellation of agreements and refund of account balances, 13 32 and ownership rights in the trust. The bill provides that an 13 33 account may be claimed by the Iowa Medicaid program upon the 13 34 death of the designated beneficiary, in accordance with the 13 35 federal ABLE program. The bill requires the state treasurer to 14 1 prepare and submit audited financial reports to the governor 14 2 and general assembly, and further requires the state treasurer 14 3 to comply with any reporting requirements of the federal ABLE 14 4 program. The bill applies to qualified disability expenses 14 5 incurred on or after July 1, 2015. 14 6 IOWA TAX BENEFITS. The bill provides several tax benefits 14 7 under the trust. First, the value of any interest in the 14 8 trust or other contracted state's qualified ABLE program 14 9 of a decedent who was an Iowa resident dying on or after 14 10 January 1, 2016, is excluded from the Iowa inheritance tax. 14 11 Second, contributions to the trust or other contracted state's 14 12 qualified ABLE program made on or after January 1, 2016, on 14 13 behalf of a designated beneficiary who is an Iowa resident 14 14 are deductible from the Iowa individual income tax up to the 14 15 maximum amount allowed per beneficiary per year for purposes 14 16 of the Iowa educational savings plan trust in Code chapter 14 17 12D. For 2015, that amount is set at $3,163. Any amounts 14 18 refunded to a taxpayer from the cancellation of a participation 14 19 agreement or that are withdrawn for purposes other than the 14 20 payment of qualified disability expenses of the designated 14 21 beneficiary must be included in Iowa net income to the extent 14 22 they were previously deducted by the taxpayer or any other 14 23 person as a contribution. Third, income and earnings from the 14 24 trust or received by resident account owners from a contracted 14 25 state's qualified ABLE program are exempt from the Iowa 14 26 individual income tax. The individual income tax benefits 14 27 apply to tax years beginning on or after January 1, 2016. 14 28 CONTINGENT IMPLEMENTATION. The implementation of the bill 14 29 is subject to an appropriation with the purpose of the trust 14 30 stated. LSB 1660SZ (2) 86 mm/sc
