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SF 39

2nd Engrossment - 89th Legislature (2015 - 2016) Posted on 08/12/2015 11:10am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 2nd Engrossment

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A bill for an act
relating to human services; establishing accounts for certain persons with
disabilities; amending Minnesota Statutes 2014, section 13.461, by adding a
subdivision; proposing coding for new law as Minnesota Statutes, chapter 256Q.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 13.461, is amended by adding a
subdivision to read:


new text begin Subd. 32. new text end

new text begin ABLE accounts, account owners, and beneficiaries. new text end

new text begin Data on ABLE
accounts and designated beneficiaries of ABLE accounts are classified under section
256Q.05, subdivision 8.
new text end

Sec. 2.

new text begin [256Q.01] PLAN ESTABLISHED.
new text end

new text begin A savings plan known as the Minnesota ABLE plan is established. In establishing
this plan, the legislature seeks to encourage and assist individuals and families in saving
private funds for the purpose of supporting individuals with disabilities to maintain health,
independence, and quality of life, and to provide secure funding for disability-related
expenses on behalf of designated beneficiaries with disabilities that will supplement, but
not supplant, benefits provided through private insurance, federal and state medical and
disability insurance, the beneficiary's employment, and other sources.
new text end

Sec. 3.

new text begin [256Q.02] CITATION.
new text end

new text begin This chapter may be cited as the "Minnesota Achieving a Better Life Experience
Act" or "Minnesota ABLE Act."
new text end

Sec. 4.

new text begin [256Q.03] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purposes of this chapter, the terms defined in this
section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin ABLE account. new text end

new text begin "ABLE account" has the meaning defined in section
529A(e)(6) of the Internal Revenue Code.
new text end

new text begin Subd. 3. new text end

new text begin ABLE account plan and plan. new text end

new text begin "ABLE account plan" and "plan" means
the qualified ABLE program, as defined in section 529A(b) of the Internal Revenue Code,
provided for in this chapter.
new text end

new text begin Subd. 4. new text end

new text begin Account. new text end

new text begin "Account" means the formal record of transactions relating to an
ABLE plan beneficiary.
new text end

new text begin Subd. 5. new text end

new text begin Account owner. new text end

new text begin "Account owner" means the designated beneficiary
of the account.
new text end

new text begin Subd. 6. new text end

new text begin Annual contribution limit. new text end

new text begin "Annual contribution limit" has the meaning
defined in section 529A(b)(2) of the Internal Revenue Code.
new text end

new text begin Subd. 7. new text end

new text begin Application. new text end

new text begin "Application" means the form executed by a prospective
account owner to enter into a participation agreement and open an account in the plan.
The application incorporates by reference the participation agreement.
new text end

new text begin Subd. 8. new text end

new text begin Board. new text end

new text begin "Board" means the State Board of Investment.
new text end

new text begin Subd. 9. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of human
services.
new text end

new text begin Subd. 10. new text end

new text begin Contribution. new text end

new text begin "Contribution" means a payment directly allocated to
an account for the benefit of a beneficiary.
new text end

new text begin Subd. 11. new text end

new text begin Department. new text end

new text begin "Department" means the Department of Human Services.
new text end

new text begin Subd. 12. new text end

new text begin Designated beneficiary and beneficiary. new text end

new text begin "Designated beneficiary" and
"beneficiary" have the meaning given in section 529A(e)(3) of the Internal Revenue Code
and further defined through regulations issued under the section.
new text end

new text begin Subd. 13. new text end

new text begin Earnings. new text end

new text begin "Earnings" means the total account balance minus the
investment in the account.
new text end

new text begin Subd. 14. new text end

new text begin Eligible individual. new text end

new text begin "Eligible individual" has the meaning defined in
section 529A(e)(1) of the Internal Revenue Code and further defined through regulations
issued under the section.
new text end

new text begin Subd. 15. new text end

new text begin Executive director. new text end

new text begin "Executive director" means the executive director of
the State Board of Investment.
new text end

new text begin Subd. 16. new text end

new text begin Internal Revenue Code. new text end

new text begin "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended.
new text end

new text begin Subd. 17. new text end

new text begin Investment in the account. new text end

new text begin "Investment in the account" means the sum
of all contributions made to an account by a particular date minus the aggregate amount
of contributions included in distributions or rollover distributions, if any, made from the
account as of that date.
new text end

new text begin Subd. 18. new text end

new text begin Member of the family. new text end

new text begin "Member of the family" has the meaning defined
in section 529A(e)(4) of the Internal Revenue Code.
new text end

new text begin Subd. 19. new text end

new text begin Participation agreement. new text end

new text begin "Participation agreement" means an agreement
to participate in the Minnesota ABLE plan between an account owner and the state,
through its agencies, the commissioner, and the board.
new text end

new text begin Subd. 20. new text end

new text begin Person. new text end

new text begin "Person" means an individual, trust, estate, partnership,
association, company, corporation, or the state.
new text end

new text begin Subd. 21. new text end

new text begin Plan administrator. new text end

new text begin "Plan administrator" means the person selected by
the commissioner and the board to administer the daily operations of the ABLE account
plan and provide marketing, record keeping, investment management, and other services
for the plan.
new text end

new text begin Subd. 22. new text end

new text begin Qualified disability expense. new text end

new text begin "Qualified disability expense" has the
meaning defined in section 529A(e)(5) of the Internal Revenue Code and further defined
through regulations issued under the section.
new text end

new text begin Subd. 23. new text end

new text begin Qualified distribution. new text end

new text begin "Qualified distribution" means a withdrawal from
an ABLE account to pay the qualified disability expenses of the beneficiary of the account.
A qualified withdrawal may be made by the beneficiary, by an agent of the beneficiary
who has the power of attorney, or by the beneficiary's legal guardian.
new text end

new text begin Subd. 24. new text end

new text begin Rollover distribution. new text end

new text begin "Rollover distribution" means a transfer of funds
made:
new text end

new text begin (1) from one account in another state's qualified ABLE program to an account for
the benefit of the same designated beneficiary or an eligible individual who is a family
member of the former designated beneficiary; or
new text end

new text begin (2) from one account to another account for the benefit of an eligible individual who
is a family member of the former designated beneficiary.
new text end

new text begin Subd. 25. new text end

new text begin Total account balance. new text end

new text begin "Total account balance" means the amount in an
account on a particular date or the fair market value of an account on a particular date.
new text end

Sec. 5.

new text begin [256Q.04] ABLE PLAN REQUIREMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin State residency requirement. new text end

new text begin The designated beneficiary of any
ABLE account must be a resident of Minnesota, or the resident of a state that has entered
into a contract with Minnesota to provide its residents access to the Minnesota ABLE plan.
new text end

new text begin Subd. 2. new text end

new text begin Single account requirement. new text end

new text begin No more than one ABLE account shall be
established per beneficiary, except as permitted under section 529A(c)(4) of the Internal
Revenue Code.
new text end

new text begin Subd. 3. new text end

new text begin Accounts-type plan. new text end

new text begin The plan must be operated as an accounts-type
plan. A separate account must be maintained for each designated beneficiary for whom
contributions are made.
new text end

new text begin Subd. 4. new text end

new text begin Contribution and account requirements. new text end

new text begin Contributions to an ABLE
account are subject to the requirements of section 529A(b)(2) of the Internal Revenue
Code prohibiting noncash contributions and contributions in excess of the annual
contribution limit. The total account balance may not exceed the maximum account
balance limit imposed under section 136G.09, subdivision 8.
new text end

new text begin Subd. 5. new text end

new text begin Limited investment direction. new text end

new text begin Designated beneficiaries may not direct
the investment of assets in their accounts more than twice in any calendar year.
new text end

new text begin Subd. 6. new text end

new text begin Security for loans. new text end

new text begin An interest in an account must not be used as security
for a loan.
new text end

Sec. 6.

new text begin [256Q.05] ABLE PLAN ADMINISTRATION.
new text end

new text begin Subdivision 1. new text end

new text begin Plan to comply with federal law. new text end

new text begin The commissioner shall ensure that
the plan meets the requirements for an ABLE account under section 529A of the Internal
Revenue Code. The commissioner may request a private letter ruling or rulings from the
Internal Revenue Service or Secretary of Health and Human Services and must take any
necessary steps to ensure that the plan qualifies under relevant provisions of federal law.
new text end

new text begin Subd. 2. new text end

new text begin Plan rules and procedures. new text end

new text begin (a) The commissioner shall establish the
rules, terms, and conditions for the plan, subject to the requirements of this chapter and
section 529A of the Internal Revenue Code.
new text end

new text begin (b) The commissioner shall prescribe the application forms, procedures, and other
requirements that apply to the plan.
new text end

new text begin Subd. 3. new text end

new text begin Consultation with other state agencies. new text end

new text begin In designing and establishing
the plan's requirements and in negotiating or entering into contracts with third parties
under subdivision 5, the commissioner shall consult with the executive director of the
State Board of Investment and the commissioner of the Office of Higher Education.
The commissioner and the executive director shall establish an annual fee, equal to a
percentage of the average daily net assets of the plan, to be imposed on account owners
to recover the costs of administration, record keeping, and investment management as
provided in subdivision 6, and section 256Q.07, subdivision 4.
new text end

new text begin Subd. 4. new text end

new text begin Marketing. new text end

new text begin The commissioner shall promote awareness of the availability
and advantages of the ABLE account plan as a way to assist individuals and families in
saving private funds for the purpose of supporting persons with disabilities. The cost of
these promotional efforts shall not be funded with fees imposed on account owners.
new text end

new text begin Subd. 5. new text end

new text begin Administration. new text end

new text begin The commissioner shall administer the plan, including
accepting and processing applications, verifying state residency, verifying eligibility,
maintaining account records, making payments, and undertaking any other necessary
tasks to administer the plan. Notwithstanding other requirements of this chapter, the
commissioner shall adopt rules for purposes of implementing and administering the plan.
The commissioner may contract with one or more third parties to carry out some or all
of these administrative duties, including providing incentives and marketing the plan.
The commissioner and the board may jointly contract with third-party providers, if the
commissioner and board determine that it is desirable to contract with the same entity or
entities for administration and investment management.
new text end

new text begin Subd. 6. new text end

new text begin Authority to impose fees. new text end

new text begin The commissioner may impose annual fees,
as provided in subdivision 3, on account owners to recover the costs of administration.
The commissioner must keep the fees as low as possible, consistent with efficient
administration, so that the returns on savings invested in the plan are as high as possible.
new text end

new text begin Subd. 7. new text end

new text begin Federally mandated reporting. new text end

new text begin (a) As required under section 529A(d) of
the Internal Revenue Code, the commissioner or the commissioner's designee shall submit
a notice to the Secretary of the Treasury upon the establishment of each ABLE account.
The notice must contain the name and state of residence of the designated beneficiary and
other information as the secretary may require.
new text end

new text begin (b) As required under section 529A(d) of the Internal Revenue Code, the
commissioner or the commissioner's designee shall submit electronically on a monthly
basis to the Commissioner of Social Security, in a manner specified by the Commissioner
of Social Security, statements on relevant distributions and account balances from all
ABLE accounts.
new text end

new text begin Subd. 8. new text end

new text begin Data. new text end

new text begin (a) Data on ABLE accounts and designated beneficiaries of ABLE
accounts are private data on individuals or nonpublic data as defined in section 13.02.
new text end

new text begin (b) The commissioner may share or disseminate data classified as private or
nonpublic in this subdivision as follows:
new text end

new text begin (1) with other state or federal agencies, only to the extent necessary to verify
identity of, determine the eligibility of, or process applications for an eligible individual
participating in the Minnesota ABLE plan; and
new text end

new text begin (2) with a nongovernmental person, only to the extent necessary to carry out the
functions of the Minnesota ABLE plan, provided the commissioner has entered into
a data-sharing agreement with the person, as provided in section 13.05, subdivision 6,
prior to sharing data under this clause or a contract with that person that complies with
section 13.05, subdivision 11, as applicable.
new text end

Sec. 7.

new text begin [256Q.06] PLAN ACCOUNTS.
new text end

new text begin Subdivision 1. new text end

new text begin Contributions to an account. new text end

new text begin Any person may make contributions
to an ABLE account on behalf of a designated beneficiary. Contributions to an account
made by persons other than the account owner become the property of the account owner.
A person does not acquire an interest in an ABLE account by making contributions
to an account. Contributions to an account must be made in cash, by check, or other
commercially acceptable means, as permitted by the United States Internal Revenue
Service and approved by the plan administrator in cooperation with the commissioner
and the board.
new text end

new text begin Subd. 2. new text end

new text begin Contribution and account limitations. new text end

new text begin Contributions to an ABLE
account are subject to the requirements of section 529A(b) of the Internal Revenue Code.
The total account balance of an ABLE account may not exceed the maximum account
balance limit imposed under section 136G.09, subdivision 8. The plan administrator must
reject any portion of a contribution to an account that exceeds the annual contribution limit
or that would cause the total account balance to exceed the maximum account balance
limit imposed under section 136G.09, subdivision 8.
new text end

new text begin Subd. 3. new text end

new text begin Authority of account owner. new text end

new text begin An account owner is the only person
entitled to:
new text end

new text begin (1) request distributions;
new text end

new text begin (2) request rollover distributions; or
new text end

new text begin (3) change the beneficiary of an ABLE account to a member of the family of the
current beneficiary, but only if the beneficiary to whom the ABLE account is transferred
is an eligible individual.
new text end

new text begin Subd. 4. new text end

new text begin Effect of plan changes on participation agreement. new text end

new text begin Amendments to
this chapter automatically amend the participation agreement. Any amendments to the
operating procedures and policies of the plan automatically amend the participation
agreement after adoption by the commissioner or the board.
new text end

new text begin Subd. 5. new text end

new text begin Special account to hold plan assets in trust. new text end

new text begin All assets of the plan,
including contributions to accounts, are held in trust for the exclusive benefit of account
owners. Assets must be held in a separate account in the state treasury to be known as
the Minnesota ABLE plan account or in accounts with the third-party provider selected
pursuant to section 256Q.05, subdivision 5. Plan assets are not subject to claims by creditors
of the state, are not part of the general fund, and are not subject to appropriation by the
state. Payments from the Minnesota ABLE plan account shall be made under this chapter.
new text end

Sec. 8.

new text begin [256Q.07] INVESTMENT OF ABLE ACCOUNTS.
new text end

new text begin Subdivision 1. new text end

new text begin State Board of Investment to invest. new text end

new text begin The State Board of Investment
shall invest the money deposited in accounts in the plan.
new text end

new text begin Subd. 2. new text end

new text begin Permitted investments. new text end

new text begin The board may invest the accounts in any
permitted investment under section 11A.24, except that the accounts may be invested
without limit in investment options from open-ended investment companies registered
under the federal Investment Company Act of 1940, United States Code, title 15, sections
80a-1 to 80a-64.
new text end

new text begin Subd. 3. new text end

new text begin Contracting authority. new text end

new text begin The board may contract with one or more third
parties for investment management, record keeping, or other services in connection with
investing the accounts. The board and commissioner may jointly contract with third-party
providers, if the commissioner and board determine that it is desirable to contract with the
same entity or entities for administration and investment management.
new text end

new text begin Subd. 4. new text end

new text begin Fees. new text end

new text begin The board may impose annual fees, as provided in section 256Q.05,
subdivision 3, on account owners to recover the cost of investment management and
related tasks for the plan. The board must use its best efforts to keep these fees as low
as possible, consistent with high quality investment management, so that the returns on
savings invested in the plan will be as high as possible.
new text end

Sec. 9.

new text begin [256Q.08] ACCOUNT DISTRIBUTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Qualified distribution methods. new text end

new text begin (a) Qualified distributions may
be made:
new text end

new text begin (1) directly to participating providers of goods and services that are qualified
disability expenses, if purchased for a beneficiary;
new text end

new text begin (2) in the form of a check payable to both the beneficiary and provider of goods or
services that are qualified disability expenses; or
new text end

new text begin (3) directly to the beneficiary, if the beneficiary has already paid qualified disability
expenses.
new text end

new text begin (b) Qualified distributions must be withdrawn proportionally from contributions and
earnings in an account owner's account on the date of distribution as provided in section
529A of the Internal Revenue Code.
new text end

new text begin Subd. 2. new text end

new text begin Distributions upon death of a beneficiary. new text end

new text begin Upon the death of a
beneficiary, the amount remaining in the beneficiary's account must be distributed pursuant
to section 529A(f) of the Internal Revenue Code.
new text end

new text begin Subd. 3. new text end

new text begin Nonqualified distribution. new text end

new text begin An account owner may request a nonqualified
distribution from an account at any time. Nonqualified distributions are based on the total
account balances in an account owner's account and must be withdrawn proportionally
from contributions and earnings as provided in section 529A of the Internal Revenue
Code. The earnings portion of a nonqualified distribution is subject to a federal additional
tax pursuant to section 529A of the Internal Revenue Code. For purposes of this
subdivision, "earnings portion" means the ratio of the earnings in the account to the total
account balance, immediately prior to the distribution, multiplied by the distribution.
new text end