Reference is to the bill as introduced.
Amend the bill, as and if amended, by striking all after the enacting clause and inserting:
/ SECTION 1. Article 3, Chapter 5, Title 11 of the 1976 Code is amended to read:
Section 11-5-400. There
is established the 'South Carolina
Palmetto ABLE Savings Program'. The purpose of the
South Carolina Palmetto 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)
'Palmetto 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 a Palmetto ABLE
savings account 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 an eligible individual
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 529A(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
Palmetto 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 Palmetto 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 contract with other states in developing the 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 A Palmetto 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 a Palmetto 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 a Palmetto 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 post secondary
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 a Palmetto 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 a
Palmetto 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, or
a qualified account under Section 529A located in another state,
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
Palmetto 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 Palmetto ABLE Savings
Expense Fund is established in the Office of the State
Treasurer. The expense fund must consist of monies received from
the Palmetto 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 Palmetto ABLE Savings Program must
be payable from the South Carolina
Palmetto ABLE Savings Expense Fund."
SECTION 2. Section 12-6-1140(12)(b) of the 1976 Code is amended to read:
"(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 Palmetto ABLE Savings Expense Fund or a
qualified fund under Section 529A located in another state, 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 Palmetto ABLE Savings
Expense Fund or are withdrawn pursuant to a qualified
withdrawal."
SECTION 3. The Code Commissioner is directed to change or correct all references to the "ABLE Savings Program" to the "Palmetto ABLE Savings Program." References to the ABLE Savings Program in the 1976 Code or other provisions of law are considered to be and must be construed to mean the "Palmetto ABLE Savings Program."
SECTION 4. This act takes effect upon approval by the Governor. /
Renumber sections to conform.
Amend title to conform.