Reference is to Printer's Date 4/23/15-H.
Amend the bill, as and if amended, by striking all after the enacting words and inserting:
/ SECTION 1. Chapter 5, Title 11 of the 1976 Code is amended by adding:
Section 11-5-400. There is established the 'South Carolina ABLE Savings Program'. The purpose of the South Carolina ABLE Savings Program is to authorize the establishment of savings accounts empowering individuals with a disability and their families to save private funds which can be used to provide for disability-related expenses in a way that supplements, but does not supplant, benefits provided through private insurance, the Medicaid program under Title XIX of the Social Security Act, the supplemental security income program under Title XVI of the Social Security Act, the beneficiary's employment, and other sources; and to provide guidelines for the maintenance of these accounts.
Section 11-5-410. As
used in this article:
(1) 'ABLE savings
account' or 'account' means an individual savings account
established in accordance with the provisions of this article
and pursuant to Section 529A of the federal Internal Revenue
Code of 1986, as amended.
(2) 'Account owner'
means the person who enters into an ABLE savings agreement
pursuant to the provisions of this article. The account owner
also must be the designated beneficiary; however, a trustee,
guardian, or conservator may be appointed as an account owner
for a designated beneficiary who is a minor or lacks capacity to
enter into an agreement. Also, the agent of the designated
beneficiary acting under durable power of attorney may open and
manage an account on behalf of and in the name of a designated
beneficiary who lacks capacity.
(3) 'Designated
beneficiary' means a South Carolina resident whose qualified
disability expenses may be paid from the account. The designated
beneficiary must be an eligible individual at the time the
account is established. The account owner may change the
designated beneficiary so long as the new beneficiary is an
eligible individual who is a qualified member of the family of
the designated beneficiary at the time of the change.
(4) 'Eligible
individual', as defined in Section 529A(e)(1) of the federal
Internal Revenue Code of 1986, as amended, means:
(a)
an individual who is entitled to benefits based on
blindness or disability pursuant to 42 U.S.C. Section 401 et
seq. or 42 U.S.C. Section 1381, as amended, and the blindness or
disability occurred before the date on which the individual
attained age twenty-six; or
(b)
an individual with respect to which a disability
certification, as defined in Section 529(e)(2) of the federal
Internal Revenue Code of 1986, as amended, to the satisfaction
of the Secretary of the United States Treasury is filed with the
Secretary for a taxable year and the blindness or disability
occurred before the date on which the individual attained age
twenty-six.
(5) 'Financial
organization' means an organization authorized to do business in
this State and is:
(a)
licensed or chartered by the Director of Insurance;
(b)
licensed or chartered by the State Commissioner of
Banking;
(c)
chartered by an agency of the federal government; or
(d)
subject to the jurisdiction and regulation of the federal
Securities and Exchange Commission.
(6) 'Management
contract' means a contract executed by the State Treasurer and a
program manager selected to act as a depository or manager of
the program, or both.
(7) 'Member of the
family' has the meaning defined in Section 529A of the federal
Internal Revenue Code of 1986, as amended.
(8) 'Nonqualified
withdrawal' means a withdrawal from an account which is not:
(a)
a qualified withdrawal; or
(b)
a rollover distribution.
(9) 'Program' means the
South Carolina ABLE Savings Program established pursuant to this
article.
(10) 'Program manager'
means a financial organization or an agency or department of
another state that has been designated to administer a qualified
ABLE Savings Program selected by the State Treasurer to act as a
depository or manager of the program, or both.
(11) 'Qualified
disability expense' means any qualified disability expense
included in Section 529A of the federal Internal Revenue Code of
1986, as amended.
(12) 'Qualified
withdrawal' means a withdrawal from an account to pay the
qualified disability expenses of the designated beneficiary of
the account.
(13) 'Rollover
distribution' means a rollover distribution as defined in
Section 529A of the federal Internal Revenue Code of 1986, as
amended.
(14) 'Savings
agreement' means an agreement between the program manager or the
State Treasurer and the account owner.
(15) 'Secretary' means
the Secretary of the United States Treasury.
Section 11-5-420. (A)
The State Treasurer shall implement and
administer the program under the terms and conditions
established by this article. The State Treasurer has the
authority and responsibility to:
(1)
develop and implement the program in a manner consistent
with the provisions of this article;
(2)
engage the services of consultants on a contract basis for
rendering professional and technical assistance and advice;
(3)
seek rulings and other guidance from the Secretary and the
federal Internal Revenue Service relating to the program;
(4)
make changes to the program required for the participants
in the program to obtain the federal income tax benefits or
treatment provided by section 529A of the federal Internal
Revenue Code of 1986, as amended;
(5)
charge, impose, and collect administrative fees and
service charges in connection with any agreement, contract, or
transaction relating to the program;
(6)
develop marketing plans and promotional materials;
(7)
establish the methods by which the funds held in accounts
must be dispersed;
(8)
establish the method by which funds must be allocated to
pay for administrative costs;
(9)
do all things necessary and proper to carry out the
purposes of this article;
(10)
adopt rules and promulgate regulations necessary to
effectuate the provisions of this article;
(11)
prepare an annual report of the ABLE Savings Program to
the Governor, the Senate, and the House of Representatives;
and
(12)
notify the Secretary when an account has been opened for a
designated beneficiary and submit other reports concerning the
program required by the Secretary.
(B) The State Treasurer
may enter into agreements with other states to either allow
South Carolina residents to participate in a plan operated by
another state or to allow residents of other states to
participate in the South Carolina ABLE Savings Program.
Section 11-5-430. (A)
The State Treasurer may implement the
program through use of program managers as account depositories
or managers, or both. The State Treasurer may solicit proposals
from program managers to act as depositories or managers of the
program, or both. Program managers submitting proposals shall
describe the investment instruments to be held in accounts. The
State Treasurer may select more than one program manager and
investment instrument for the program. The State Treasurer may
select as program depositories or managers the program managers,
from among the bidding program managers, that demonstrate the
most advantageous combination, both to potential program
participants and this State, of the following factors:
(1)
financial stability and integrity of the program
manager;
(2)
the safety of the investment instrument being offered;
(3)
the ability of the program manager to satisfy
recordkeeping and reporting requirements;
(4)
the program manager's plan for promoting the program and
the investment the organization is willing to make to promote
the program;
(5)
the fees, if any, proposed to be charged to the account
owners;
(6)
the minimum initial deposit and minimum contributions that
the financial organization requires;
(7)
the ability of the program manager to accept electronic
withdrawals, including payroll deduction plans; and
(8)
other benefits to the State or its residents included in
the proposal, including fees payable to the State to cover
expenses of the operation of the program.
(B) The State Treasurer
may enter into contracts with program managers necessary to
effectuate the provisions of this article. A management contract
must include, at a minimum, terms requiring the program managers
to:
(1)
take action required to keep the program in compliance
with requirements of this article and take actions not contrary
to its contract to manage the program to qualify as a 'qualified
ABLE Savings Program' as defined in Section 529A of the federal
Internal Revenue Code of 1986, as amended;
(2)
keep adequate records of each account, keep each account
segregated, and provide the State Treasurer with the information
necessary to prepare the statements required by Section
11-5-440;
(3)
compile and total information contained in statements
required to be prepared under Section 11-5-440 and provide
compilations to the State Treasurer;
(4)
if there is more than one program manager, provide the
State Treasurer with information as is necessary to determine
compliance with Section 11-5-440;
(5)
provide the State Treasurer with access to the books and
records of the program manager to the extent needed to determine
compliance with the contract, this article, and Section 529A of
the federal Internal Revenue Code of 1986, as amended;
(6)
hold all accounts for the benefit of the account owner,
owners, or the designated beneficiary;
(7)
be audited at least annually by a firm of certified public
accountants selected by the program manager, with the approval
of the State Treasurer, and provide the results of the audit to
the State Treasurer;
(8)
provide the State Treasurer with copies of all regulatory
filings and reports made by the program manager during the term
of the management contract or while the program manager is
holding any accounts, other than confidential filings or reports
that are not part of the program. The program manager shall make
available for review by the State Treasurer the results of the
periodic examination of the manager by any state or federal
banking, insurance, or securities commission, except to the
extent that a report or reports may not be disclosed under law;
and
(9)
ensure that any description of the program, whether in
writing or through the use of any media, is consistent with the
marketing plan developed pursuant to the provisions of this
article.
(C) The State Treasurer
may:
(1)
enter into contracts as he considers necessary and proper
for the implementation of the program;
(2)
require that an audit be conducted of the operations and
financial position of the program depository and manager at any
time if the State Treasurer has any reason to be concerned about
the financial position, the recordkeeping practices, or the
status of accounts of the program depository and manager;
and
(3)
terminate or not renew a management agreement. If the
State Treasurer terminates or does not renew a management
agreement, the State Treasurer shall take custody of accounts
held by the program manager and shall seek to promptly transfer
the accounts to another financial organization that is selected
as a program manager or depository and into investment
instruments as similar to the original instruments as
possible.
(D) The State
Treasurer, the Department of Social Services, the Department of
Health and Human Services, and the Department of Disability and
Special Needs are authorized to exchange data regarding eligible
individuals to carry out the purposes of this article.
Section 11-5-440. (A)
An ABLE savings account established pursuant
to the provisions of this article must be opened by a designated
beneficiary, a designated beneficiary's agent under a durable
power of attorney, a trustee holding funds for the benefit of a
designated beneficiary, or a court appointed guardian or
conservator of a designated beneficiary. Each designated
beneficiary may have only one account. The State Treasurer may
establish a nonrefundable application fee. An application for an
account must be in the form prescribed by the State Treasurer
and contain the following:
(1)
name, address, and social security number of the account
owner;
(2)
name, address, and social security number of the
designated beneficiary, if the account owner is the
beneficiary's trustee or guardian;
(3)
certification relating to no excess contributions; and
(4)
additional information as the State Treasurer may
require.
(B) A person may make
contributions to an ABLE savings account after the account is
opened, subject to the limitations imposed by Section 529A of
the federal Internal Revenue Code of 1986, as amended, or any
adopted rules and regulations promulgated by the State Treasurer
pursuant to this article.
(C) Contributions to an
ABLE savings account may be made only in cash. The State
Treasurer or program manager shall reject or withdraw
contributions promptly:
(1)
in excess of the limits established pursuant to subsection
(B); or
(2)
the total contributions if the:
(a)
value of the account is equal to or greater than the
account maximum established by the State Treasurer. The account
maximum must be equal to the account maximum for postsecondary
education savings accounts; or
(b)
designated beneficiary is not an eligible individual in
the current calendar year.
(D)(1) An account owner
may:
(a)
change the designated beneficiary of an account to an
individual who is a qualified member of the family of the prior
designated beneficiary in accordance with procedures established
by the State Treasurer; and
(b)
transfer all or a portion of an account to another ABLE
savings account, the designated beneficiary of which is a member
of the family as defined in Section 529A of the federal Internal
Revenue Code of 1986, as amended.
(2)
An account owner may not use an interest in an account as
security for a loan. A pledge of an interest in an account is of
no effect.
(E)(1) If there is any
distribution from an account to an individual or for the benefit
of an individual during a calendar year, the distribution must
be reported to the federal Internal Revenue Service and each
account owner, the designated beneficiary, or the distributee to
the extent required by state or federal law.
(2)
A statement must be provided to each account owner
annually and at other increments established by the State
Treasurer in the program guidelines. The statement must contain
the information the State Treasurer requires to be reported to
the account owner.
(3)
A statement and information relating to an account must be
prepared and filed to the extent required by this article and
other state or federal law.
(F)(1) The program
shall provide separate accounting for each designated
beneficiary. An annual fee may be imposed upon the account owner
for the maintenance of an account.
(2)
Funds held in an ABLE savings account:
(a)
are exempt from attachment, execution, or garnishment for
claims of creditors of the contributor and the designated
beneficiary;
(b)
to the fullest extent permissible under state and federal
law, will be disregarded for the purposes of determining a
designated beneficiary's eligibility to receive, or the amount
of, any public assistance available to the designated
beneficiary, including Medicaid; and
(c)
following the death of a designated beneficiary, may be
subject to recovery by the South Carolina Department of Health
and Human Services up to an amount equal to the total of
Medicaid benefits, if any, paid on behalf of the designated
beneficiary by the state Medicaid program, but only to the
extent recovery is required by state or federal law. Recovery
by the State is subject to regulations imposed by the
secretary.
(3)
The amount distributed from an ABLE savings account for
the purposes of paying qualified disability expenses:
(a)
are exempt from attachment, execution, or garnishment for
claims of creditors of the contributor and the designated
beneficiary; and
(b)
to the fullest extent permissible under state and federal
law, will be disregarded for the purposes of determining a
designated beneficiary's eligibility to receive, or the amount
of, any public assistance available to the designated
beneficiary, including Medicaid.
(G) To the extent
earnings in an ABLE savings account and distributions from an
ABLE savings account are not subject to federal income tax, they
will not be subject to state income tax.
Section 11-5-450. (A)
Nothing in this article may create or be
construed to create any obligation of the State Treasurer, the
State, or any agency or instrumentality of the State to
guarantee for the benefit of an account owner or designated
beneficiary with respect to the:
(1)
return of principal;
(2)
rate of interest or other return on an account; or
(3)
payment of interest or other return on an account.
(B) The State Treasurer
may adopt rules and promulgate regulations to provide that each
contract, application, or other similar document that may be
used in connection with opening an account clearly indicates
that the account is not insured by the State and that the
principal deposited and the investment return are not guaranteed
by the State.
Section 11-5-460. (A)
The South Carolina ABLE Savings Program
Trust Fund is established in the Office of the State Treasurer.
The trust fund must be utilized if the State Treasurer elects to
accept deposits from contributors rather than have deposits sent
directly to the program manager. The trust fund must consist of
any monies deposited by account owners and other contributors
pursuant to the provisions of this article which are not
deposited directly with the program manager. All interest
derived from the deposit and investment of monies in the trust
fund must be credited to the fund. At the end of each fiscal
year, all unexpended and unencumbered monies in the trust fund
must remain in the fund and not be credited or transferred to
the state general fund or to another fund.
(B)(1) The South
Carolina ABLE Savings Expense Fund is established in the Office
of the State Treasurer. The expense fund must consist of monies
received from the ABLE Savings Program manager or managers,
governmental or private grants, and state general fund
appropriations, if any, for the program.
(2)
All expenses incurred by the State Treasurer in developing
and administering the ABLE Savings Program must be payable from
the South Carolina ABLE Savings Expense Fund."
SECTION 2. Section 12-6-1140 of the 1976 Code is amended by adding an appropriately numbered item at the end to read:
"( )(a)
Contributions made to each investment trust account
created pursuant to Article 3, Chapter 5, Title 11, by a
resident of this State or a nonresident required to file a State
of South Carolina income tax return up to the limit of maximum
contributions allowed to such accounts under Section 529A of the
federal Internal Revenue Code of 1986, as amended, including
funds transferred to an investment trust account from another
qualified plan, as allowable under Section 529 of the federal
Internal Revenue Code of 1986, as amended.
(b)
Any interest, dividends, gains, property, or income
accruing on the payments made to an investment trust agreement
pursuant to Article 3, Chapter 5, Title 11 or on any account in
the South Carolina ABLE Savings Expense Fund must be excluded
from the gross income of any such account owner, contributor, or
beneficiary for purposes of South Carolina income taxes, to the
extent the amounts remain on deposit in the South Carolina ABLE
Savings Expense Fund or are withdrawn pursuant to a Qualified
Withdrawal.
(c)
The earnings portion of any withdrawals from an account
that are not qualified withdrawals must be included in the gross
income of the resident recipient of the withdrawal for purposes
of South Carolina income taxes in the year of the withdrawal.
Withdrawals of the principal amount of contributions that are
not qualified withdrawals must be recaptured into South Carolina
income subject to tax to the extent the contributions were
previously deducted from South Carolina taxable income.
SECTION 3. Sections 11-5-10 through 11-5-280 of the 1976 Code are designated as Article 1, Chapter 5, Title 11 entitled "General Provisions". The Code Commissioner is directed to change references from "chapter" to "article" as appropriate to reflect the redesignated provisions.
SECTION 4. This act takes effect upon approval by the Governor and applies for tax years beginning after 2015. /
Renumber sections to conform.
Amend title to conform.