A06516 Summary:

COSPNSRLavine, Crespo, Stirpe, Blake, Cusick, Steck, McDonald, Skartados, Raia, Duprey, Saladino, Arroyo, Hooper, Palmesano, McLaughlin, Walter, DiPietro, Montesano, Pichardo, Richardson
MLTSPNSRCook, Lopez, Seawright, Simon, Tenney
Add Art 2-D SS90 - 90-f, amd S237, Bank L; amd S612, Tax L
Relates to the creation of the New York achieving a better life experience (NY ABLE) savings account act.
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A06516 Actions:

03/26/2015referred to banks
01/06/2016referred to banks
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A06516 Text:

                STATE OF NEW YORK
                               2015-2016 Regular Sessions
                   IN ASSEMBLY
                                     March 26, 2015
        Introduced  by M. of A. GUNTHER -- read once and referred to the Commit-
          tee on Banks
        AN ACT to amend the banking law and the tax law, in relation  to  estab-
          lishing the NY ABLE act
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. This act shall be known and may be cited as the  "New  York
     2  achieving a better life experience (NY ABLE) savings account act".
     3    §  2.  Legislative  intent.  The  legislative intent of this act is to
     4  encourage and assist individuals and families in  saving  private  funds
     5  for  the purpose of supporting individuals with disabilities to maintain
     6  health, independence and quality of life; and to provide secure  funding
     7  for  disability  related  expenses on behalf of designated beneficiaries
     8  with disabilities that  will  supplement,  but  not  supplant,  benefits
     9  provided through existing sources.
    10    § 3. The banking law is amended by adding a new article 2-D to read as
    11  follows:
    12                                 ARTICLE 2-D
    14  Section 90.   Short title.
    15          90-a. Definitions.
    16          90-b. Establishment of plan.
    17          90-c. NY ABLE account advisory committee.
    18          90-d. Program requirements.
    19          90-e. Distribution requirements.
    20          90-f. Powers of the comptroller.
    21    § 90. Short title.
    22    This  article shall be known and may be cited as the "New York achiev-
    23  ing a better life experience (NY ABLE) savings account act".
    24    § 90-a. Definitions.
    25    As used in this article:
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 6516                             2
     1    1. "Superintendent" means the New York state superintendent of  finan-
     2  cial services.
     3    2.  "Financial  organization"  means  an organization authorized to do
     4  business in the state of New York and (a) which is an authorized fiduci-
     5  ary to act as a trustee pursuant to the provisions of an act of congress
     6  entitled "employee retirement income  security  act  of  1974"  as  such
     7  provisions  may  be  amended from time to time, or an insurance company;
     8  and (b)(i) is licensed or chartered by the state department of financial
     9  services, (ii) is chartered by an  agency  of  the  federal  government,
    10  (iii)  is  subject  to the jurisdiction and regulation of the securities
    11  and exchange commission of the federal government, or (iv) is any  other
    12  entity  otherwise  authorized to act in this state as a trustee pursuant
    13  to the provisions of an act of congress  entitled  "employee  retirement
    14  income security act of 1974" as such provisions may be amended from time
    15  to time.
    16    3.  "Account"  or  "NY  ABLE account" shall mean an individual savings
    17  account established in accordance with the provisions of this article.
    18    4. "Account owner" shall mean the designated beneficiary who opens the
    19  NY ABLE account or other person who opens the NY ABLE account on  behalf
    20  of  the  designated  beneficiary in compliance with section five hundred
    21  twenty-nine-A.
    22    5. "Comptroller" shall mean the comptroller of the state of New York.
    23    6. "Designated beneficiary" shall mean, with respect to an account  or
    24  accounts,  the  individual  with  a  disability who is designated as the
    25  individual whose qualified expenses are expected to  be  paid  from  the
    26  account.  The  "designated  beneficiary"  must be a resident of New York
    27  state or a resident of a state that: (a) does not have a qualified  ABLE
    28  program recognized under section five hundred twenty-nine-A, and (b) has
    29  entered  into a contract with New York state to provide residents of the
    30  contracting state with access to New York state's ABLE program.
    31    7. "Qualified expenses" shall mean "qualified disability expenses"  as
    32  defined under section five hundred twenty-nine-A.
    33    8.  "Qualified  withdrawal" shall mean a withdrawal from an account to
    34  pay for the qualified expenses of the designated beneficiary of  the  NY
    35  ABLE account.
    36    9.  "Nonqualified  withdrawal" shall mean a withdrawal from an account
    37  other than (a) a qualified withdrawal, or (b) a withdrawal made  as  the
    38  result of the death of the designated beneficiary of an account.
    39    10.  "Management  contract"  shall  mean  the contract executed by the
    40  comptroller and a financial organization selected to act as a depository
    41  and manager of the program.
    42    11. "Savings agreement" shall mean  an  agreement  between  the  comp-
    43  troller or a financial organization and the account owner.
    44    12.  "Program manager" shall mean a financial organization selected by
    45  the comptroller to act as a depository and manager of the program.
    46    13. "Individual with a disability" shall mean an individual who is  an
    47  "eligible   individual"   as   defined   under   section   five  hundred
    48  twenty-nine-A.
    49    14. "Section five hundred twenty-nine-A" means  section  five  hundred
    50  twenty-five-A  of  the internal revenue code of 1986, as amended, or any
    51  successor provision thereto, and any regulations promulgated  thereunder
    52  or  tax announcements or other binding regulatory guidance provided with
    53  respect thereto.
    54    § 90-b. Establishment of plan.
    55    1. The superintendent shall establish a NY ABLE account plan  for  all
    56  eligible individuals and families for the purpose of supporting individ-

        A. 6516                             3
     1  uals  with disabilities to maintain health, independence, and quality of
     2  life. The superintendent shall promulgate any and all  rules  and  regu-
     3  lations necessary for the implementation of this article.
     4    2.  The superintendent shall enter into written agreements with one or
     5  more financial organizations to administer the NY ABLE  savings  account
     6  plan  for  eligible  individuals  and  families and to invest funds held
     7  pursuant to such plan.  The  superintendent  shall  establish  reporting
     8  requirements  for such financial organizations including but not limited
     9  to reports to the superintendent, participating  individuals  and  fami-
    10  lies,  participating employers, and federal government agencies, regard-
    11  ing the fiscal status of NY ABLE savings accounts.
    12    3. NY ABLE accounts shall be  maintained  by  financial  organizations
    13  under  written  agreement with the superintendent. Such financial organ-
    14  izations shall be solely responsible for distributions  to  participants
    15  pursuant to this article.
    16    4.  Notwithstanding  any  other  provisions  to  the contrary, NY ABLE
    17  accounts shall not be considered  in  determining  eligibility  for  any
    18  local or state means-tested program.
    19    § 90-c. NY ABLE account advisory committee.
    20    1.  The  superintendent  shall  establish  a  NY ABLE account advisory
    21  committee.
    22    2. The superintendent shall appoint members of  the  NY  ABLE  account
    23  advisory committee in consultation with the New York state department of
    24  health,  the  office  of  mental health, and the office for persons with
    25  developmental disabilities. The members shall be appointed for a term of
    26  three years.
    27    (a) At least one half of the members of the NY ABLE  account  advisory
    28  committee must have knowledge, skill and expertise in issues relating to
    29  individuals with disabilities.
    30    (b) The members shall be representative of all geographic areas of the
    31  state.
    32    3. The advisory committee shall:
    33    (a)  Consider, study and review the work of the superintendent and the
    34  comptroller in relation to the NY ABLE account program.
    35    (b) Advise the superintendent and comptroller and make recommendations
    36  for the improvement of the NY ABLE account program.
    37    4. The advisory committee shall meet at least twice per year.
    38    5. The members of the advisory committee shall receive no compensation
    39  for their services as members, but each shall be allowed  the  necessary
    40  and  actual  expenses  incurred  in the performance of his or her duties
    41  under this section.
    42    6. In no event shall any member, officer, or employee of the  advisory
    43  committee  be  liable  for damages in any civil action for any act done,
    44  failure to act, or statement or opinion made, while discharging  his  or
    45  her  duties  as a member, officer, or employee of the advisory committee
    46  if he or she shall have acted in good faith, with reasonable care.
    47    § 90-d. Program requirements.
    48    1. NY ABLE accounts established pursuant to  the  provisions  of  this
    49  article shall be governed by the provisions of this section.
    50    2.  A NY ABLE account may be opened only by the designated beneficiary
    51  unless otherwise permitted under section five hundred twenty-nine-A.  If
    52  the  designated  beneficiary of the account is a minor or has a guardian
    53  or other fiduciary appointed for managing  the  beneficiary's  financial
    54  affairs,  the  guardian or fiduciary for such designated beneficiary may
    55  serve as the account owner if such form of ownership is permitted or not
    56  prohibited under section five hundred twenty-nine-A.

        A. 6516                             4
     1    (a) An application for such account shall be in the form prescribed by
     2  the program and contain the following:
     3    (i) The name, address and social security number or employer identifi-
     4  cation number of the account owner;
     5    (ii) The designation of a designated beneficiary;
     6    (iii)  The  name, address and social security number of the designated
     7  beneficiary; and
     8    (iv) Such other information as the program may require.
     9    (b) The comptroller may establish a nominal fee for such application.
    10    3. An account owner may own only one NY ABLE account unless  otherwise
    11  permitted by section five hundred twenty-nine-A.
    12    4.  Any person, including the account owner, may make contributions to
    13  the account after the account is opened.
    14    5. Contributions to accounts may be made only in cash.
    15    6. Contributions to a NY ABLE account shall not exceed  the  limit  on
    16  annual    contributions   established   under   section   five   hundred
    17  twenty-nine-A.
    18    7. An account owner may withdraw all or part of the  balance  from  an
    19  account on sixty days notice or such shorter period as may be authorized
    20  under  rules  governing the program. Such rules shall include provisions
    21  that will generally enable the determination as to whether a  withdrawal
    22  is a nonqualified withdrawal or a qualified withdrawal.
    23    8.  An  account  owner  may  change  the  designated beneficiary of an
    24  account to another beneficiary who is qualified under the provisions  of
    25  this  article  only  to  the extent permitted under section five hundred
    26  twenty-nine-A.
    27    9. The program shall provide separate accounting for  each  designated
    28  beneficiary.
    29    10.  An  account  owner shall be permitted to direct the investment of
    30  any contributions to an account or the earnings thereon no more than two
    31  times in any calendar year.
    32    11. Neither an account owner not a designated beneficiary may  use  an
    33  interest in an account as security for a loan. Any pledge of an interest
    34  in an account shall be of no force and effect.
    35    12.  The comptroller shall promulgate rules and regulations to prevent
    36  contributions on behalf of a designated  beneficiary  in  excess  of  an
    37  amount  that would cause the aggregate account balance to exceed a maxi-
    38  mum account balance, as established from  time  to  time  by  the  comp-
    39  troller.  Such  maximum amount shall reflect reasonable expenditures and
    40  shall reflect any limitations described in section five hundred  twenty-
    41  nine-A.
    42    13.  The  program  shall issue reports and notices to federal agencies
    43  and designated beneficiaries as  required  under  section  five  hundred
    44  twenty-nine-A.
    45    14. The program shall disclose the following information in writing to
    46  each account owner and prospective account owner of a NY ABLE account:
    47    (a) The terms and conditions for purchasing a NY ABLE account;
    48    (b) Any restrictions on the substitution of beneficiaries;
    49    (c) The person or entity entitled to terminate the savings agreement;
    50    (d) The period of time during which a beneficiary may receive benefits
    51  under the savings agreement;
    52    (e)  The  terms  and  conditions  under  which  money may be wholly or
    53  partially withdrawn from the program, including, but not limited to, any
    54  reasonable charges and fees that may be imposed for withdrawal;
    55    (f) The probable tax consequences associated with contributions to and
    56  distributions from accounts; and

        A. 6516                             5
     1    (g) All other rights and  obligations  pursuant  to  NY  ABLE  savings
     2  agreements,  and  any  other  terms,  conditions,  and provisions deemed
     3  necessary and appropriate by the superintendent and the comptroller.
     4    15.  NY ABLE savings agreements shall be subject to section fourteen-c
     5  of this chapter and the "truth-in-savings" regulations promulgated ther-
     6  eunder.
     7    § 90-e. Distribution requirements.
     8    1. Designated beneficiaries shall be eligible for a distribution  from
     9  the  accumulated  funds  deferred to their NY ABLE saving account estab-
    10  lished pursuant to  this  article,  in  full  and  partial  disbursement
    11  options for qualified expenses.
    12    2.  Under  the NY ABLE savings account plan, amounts shall not be made
    13  available to designated beneficiaries unless the designated  beneficiary
    14  has been determined to be an individual with a disability.
    15    § 90-f. Powers of the comptroller.
    16    1.  The  comptroller may implement the NY ABLE savings account program
    17  through use of  financial  organizations  as  account  depositories  and
    18  managers. Under the program, individuals may establish accounts directly
    19  with an account depository.
    20    2.  The comptroller may solicit proposals from financial organizations
    21  to act as depositories and mangers from the program. Financial organiza-
    22  tions submitting proposals  shall  describe  the  investment  instrument
    23  which  will be held in accounts. The comptroller shall select as program
    24  depositories and mangers the  financial  organization,  from  among  the
    25  bidding  financial organizations that demonstrates the most advantageous
    26  combination, both to potential program participants and this  state,  of
    27  the following factors:
    28    (a) Financial stability and integrity of the financial organization;
    29    (b) The safety of the investment instrument being offered;
    30    (c) The ability of the investment instrument to track increasing costs
    31  of obtaining care for individuals with disabilities;
    32    (d) The ability of the financial organization to satisfy recordkeeping
    33  and reporting requirements;
    34    (e)  The  financial  organization's plan for promoting the program and
    35  the investment it is willing to make to promote the program;
    36    (f) The fees, if any, proposed to be charged to  persons  for  opening
    37  accounts;
    38    (g)  The  minimum  initial  deposit and minimum contributions that the
    39  financial organization will require;
    40    (h) The ability of banking organizations to  accept  electronic  with-
    41  drawals, including payroll deduction plans; and
    42    (i)  Other  benefits  to  the  state  or its residents included in the
    43  proposal, including fees payable to the state to cover expenses of oper-
    44  ation of the program.
    45    3. The comptroller may enter into a contract with a  financial  organ-
    46  ization.  Such financial organization management may provide one or more
    47  types of investment instrument.
    48    4. The comptroller may select more than one financial organization for
    49  the program.
    50    5. A management contract shall include, at a minimum, terms  requiring
    51  the financial organization to:
    52    (a)  Take  any  action required to keep the program in compliance with
    53  requirements of section 90-c of this article;
    54    (b) Keep adequate records of each account, keep  each  account  segre-
    55  gated from each other account, and provide the comptroller with informa-
    56  tion as required;

        A. 6516                             6
     1    (c) If there is more than one program manager, provide the comptroller
     2  with such information necessary to determine compliance;
     3    (d) Provide the comptroller or his or her designee access to the books
     4  and  records  of  the  program manager to the extent needed to determine
     5  compliance with the contract;
     6    (e) Hold all accounts for the benefit of the account owner;
     7    (f) Be audited at  least  annually  by  a  firm  of  certified  public
     8  accountants selected by the program manager and that the results of such
     9  audit be provided to the comptroller; and
    10    (g)  Provide the comptroller with copies of all regulatory filings and
    11  reports made by it during the term of the management contract  or  while
    12  it  is  holding any accounts, other than confidential filings or reports
    13  that will not become part of the program. The program manager shall make
    14  available for review by the comptroller  the  results  of  any  periodic
    15  examination  of such manager by any state of federal banking, insurance,
    16  or securities commission, except to  the  extent  that  such  report  or
    17  reports  may  not be disclosed under applicable law or the rules of such
    18  commission.
    19    6. The comptroller may provide that an audit shall be conducted of the
    20  operations and financial position of the program depository and  manager
    21  at  any time if the comptroller has any reason to be concerned about the
    22  financial position,  the  recordkeeping  practices,  or  the  status  of
    23  accounts of such program depository and manager.
    24    7.  During  the term of any contract with a program manager, the comp-
    25  troller shall conduct an examination of such manager and its handling of
    26  accounts. Such examination shall be conducted  at  least  biennially  if
    27  such  manager  is  not  otherwise subject to periodic examination by the
    28  superintendent, the federal deposit insurance corporation or other simi-
    29  lar entity.
    30    8. (a) If selection of a financial organization as a  program  manager
    31  or depository is not renewed, after the end of its term:
    32    (i) Accounts previously established and held in investment instruments
    33  at such financial organization may be terminated;
    34    (ii) Additional contributions may be made to such accounts;
    35    (iii)  No new accounts may be placed with such financial organization;
    36  and
    37    (iv) Existing accounts held by such depository shall remain subject to
    38  all oversight and reporting requirements established by the comptroller.
    39    (b) If the  comptroller  terminates  a  financial  organization  as  a
    40  program  manager or depository, he or she shall take custody of accounts
    41  held by such financial organization and shall seek to promptly  transfer
    42  such  accounts  to  another financial organization that is selected as a
    43  program manager or depository and into investment instruments as similar
    44  to the original instruments as possible.
    45    9. The comptroller may enter into such contracts as it deems necessary
    46  and proper for the implementation of the program.
    47    § 4. Section 237 of the banking law is amended by adding a new  subdi-
    48  vision 9 to read as follows:
    49    9.  Subject  to  any  regulations  and  restrictions prescribed by the
    50  superintendent of financial services, a savings bank shall have power to
    51  act as trustee of a New York achieving  a  better  life  experience  (NY
    52  ABLE)  savings  account  established  pursuant  to article two-d of this
    53  chapter, provided that the provisions of the written  governing  instru-
    54  ment  creating  the trust require the funds of such trust to be invested
    55  exclusively in deposits in savings banks.

        A. 6516                             7
     1    § 5. Subsection (c) of section 612 of the tax law is amended by adding
     2  two new paragraphs 42 and 43 to read as follows:
     3    (42) Contributions made during the taxable year by an account owner to
     4  one  or  more  "NY ABLE" accounts established under article two-d of the
     5  banking law, provided, however that such exclusion  shall  be  available
     6  only to the account owner and not to any other person.
     7    (43)  Distributions for qualified expenses of a designated beneficiary
     8  from a "NY ABLE" account established under article two-d of the  banking
     9  law,  to  the  extent  includible in gross income for federal income tax
    10  purposes.
    11    § 6. This act shall take effect on the one hundred eightieth day after
    12  it shall have become a law; provided, however, that effective immediate-
    13  ly, the addition, amendment and/or repeal of any  rules  or  regulations
    14  necessary  for  the implementation of this act on its effective date are
    15  authorized and directed to be made  and  completed  on  or  before  such
    16  effective date.
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