S01006 Summary:

SAME ASNo same as
Add Art 84 SS84.01 - 84.11, Ment Hyg L; amd S237, Bank L; amd S612, Tax L
Establishes the New York achieving a better life experience (NY ABLE) savings account act to support individuals with disabilities to maintain health, independence and quality of life.
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S01006 Actions:

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S01006 Text:

                STATE OF NEW YORK
                               2015-2016 Regular Sessions
                    IN SENATE
                                     January 8, 2015
        Introduced  by Sens. CARLUCCI, ROBACH -- read twice and ordered printed,
          and when printed to be committed to the Committee on Mental Health and
          Developmental Disabilities
        AN ACT to amend the mental hygiene law, the banking law and the tax law,
          in relation to establishing 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) 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  developmental  disabili-
     6  ties  to  maintain  health,  independence  and  quality  of life; and to
     7  provide secure funding for disability  related  expenses  on  behalf  of
     8  designated beneficiaries with intellectual or developmental disabilities
     9  that will supplement, but not supplant, benefits provided through exist-
    10  ing sources.
    11    §  3.  The mental hygiene law is amended by adding a new article 84 to
    12  read as follows:
    13                                 ARTICLE 84
    15  Section 84.01 Short title.
    16          84.03 Definitions.
    17          84.05 Establishment of plan.
    18          84.07 Program requirements.
    19          84.09 Distribution requirements.
    20          84.11 Powers of the comptroller.
    21  § 84.01 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  § 84.03 Definitions.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 1006                             2
     1    As  used  in this article: 1. "Commissioner" means the commissioner of
     2  the office for people with developmental disabilities.
     3    2.  The term "financial organization" means an organization authorized
     4  to do business in the state of New York and (a) which is  an  authorized
     5  fiduciary  to  act  as a trustee pursuant to the provisions of an act of
     6  congress entitled "Employee Retirement Income Security Act of  1974"  as
     7  such provisions may be amended from time to time, or an insurance compa-
     8  ny;  and (b) (i) is licensed or chartered by the state insurance depart-
     9  ment, (ii) is licensed or chartered by  the  state  banking  department,
    10  (iii)  is  chartered  by  an  agency  of the federal government, (iv) is
    11  subject to  the  jurisdiction  and  regulation  of  the  securities  and
    12  exchange commission of the federal government, or (v) is any other enti-
    13  ty  otherwise  authorized  to act in this state as a trustee pursuant to
    14  the provisions of an  act  of  congress  entitled  "Employee  Retirement
    15  Income Security Act of 1974" as such provisions may be amended from time
    16  to time.
    17    3.  "Account"  or  "NY  ABLE account" shall mean an individual savings
    18  account established in accordance with the provisions of this article.
    19    4. "Account owner" shall mean a  person  who  enters  into  a  savings
    20  agreement pursuant to the provisions of this article, including a person
    21  who enters into such an agreement as a fiduciary or agent on behalf of a
    22  trust,  estate,  partnership,  association,  company or corporation. The
    23  account owner may also be the designated beneficiary of the account.
    24    5. "Designated beneficiary" shall mean, with respect to an account  or
    25  accounts,  the  intellectually  or  developmentally  disabled individual
    26  designated as the individual whose qualified expenses are expected to be
    27  paid from the account or accounts.
    28    6. "Qualified expenses" shall mean any tuition,  and education materi-
    29  al and services, housing expenses for  a  primary  residence,  including
    30  rent,  real  property taxes, and utility charges, mass transit, vehicle,
    31  and other transportation expenses, expenses  related  to  obtaining  and
    32  maintaining  employment;  health,  prevention  and  wellness,  expenses,
    33  including insurance premiums, rehabilitation services,  durable  medical
    34  equipment,  and  nutritional  management;  and  other expenses which the
    35  commissioner shall deem qualified in accordance with the purpose of this
    36  article and which are used for the direct benefit of  an  intellectually
    37  or developmentally disabled individual.
    38    7.  "Nonqualified  withdrawal" shall mean a withdrawal from an account
    39  other than a qualified withdrawal or a withdrawal made as the result  of
    40  the death or disability of the designated beneficiary of an account.
    41    8. "Management contract" shall mean the contract executed by the comp-
    42  troller and a financial organization selected to act as a depository and
    43  manager of the program.
    44    9. "Savings agreement" shall mean an agreement between the comptroller
    45  or a financial organization and the account owner.
    46    10.  "Program manager" shall mean a financial organization selected by
    47  the comptroller to act as a depository and manager of the program.
    48    11. "Intellectually or developmentally disabled"  as  defined  by  the
    49  commissioner of the office for people with developmental disabilities in
    50  consultation with the commissioner.
    51  § 84.05 Establishment of plan.
    52    1.  The  commissioner shall establish a "NY ABLE" account plan for all
    53  eligible individuals and families for the purpose of supporting individ-
    54  uals with disabilities to maintain health, independence, and quality  of
    55  life.  The  commissioner  shall  promulgate  any and all rules and regu-
    56  lations necessary for the implementation of this article.

        S. 1006                             3
     1    2. The commissioner shall enter into written agreements  with  one  or
     2  more  financial  organizations to administer the NY ABLE savings account
     3  plan for eligible individuals and families  and  to  invest  funds  held
     4  pursuant  to  such  plan.  The  commissioner  shall  establish reporting
     5  requirements  for such financial organizations including but not limited
     6  to reports to the commissioner, participating individuals and  families,
     7  and  participating  employers,  regarding  the  fiscal status of NY ABLE
     8  savings accounts.
     9    3. The rules and regulations promulgated  by  the  commissioner  shall
    10  establish standards for the selection of financial organizations author-
    11  ized  to  do business in this state to administer in such plans, includ-
    12  ing, but not limited to, the following criteria: (a)  rates  of  commis-
    13  sion,  brokerage  and  other  fees,  administrative expenses and related
    14  service charges imposed by the financial organization;  (b)  variety  of
    15  types  of investment opportunities offered by the financial organization
    16  and/or among the financial organizations selected  and  the  ability  to
    17  transfer  among  such  opportunities; (c) the stability of the financial
    18  organization as evidenced by experience, reputation,  assets  and  hold-
    19  ings,  ability  to  guarantee  specific  rates of return; (d) ability to
    20  comply with reporting requirements to the commissioner  and  to  partic-
    21  ipants in such a plan; and (e) such other factors which would be consid-
    22  ered by a prudent investor in such a plan.
    23    4. NY ABLE savings accounts shall be maintained by financial organiza-
    24  tions  under  written  agreement  with  the commissioner. Such financial
    25  organizations shall be solely responsible for distributions  to  partic-
    26  ipants pursuant to this article.
    27    5.  The  commissioner  shall  establish a process for certification of
    28  mental disability for  the  purpose  of  establishing  the  validity  of
    29  accounts and expenditures from accounts established under this article.
    30  § 84.07 Program requirements.
    31    1.  "NY  ABLE" accounts established pursuant to the provisions of this
    32  article shall be governed by the provisions of this section.
    33    2. A NY ABLE account may be opened by any person who desires  to  save
    34  money for the payment of the qualified living expenses of the designated
    35  intellectually  or developmentally disabled beneficiary. Such person who
    36  opens a NY ABLE account shall be considered the  account  owner  as  set
    37  forth in this article.
    38    (a) An application for such account shall be in the form prescribed by
    39  the program and contain the following:
    40    (i) the name, address and social security number or employer identifi-
    41  cation number of the account owner;
    42    (ii) the designation of a designated beneficiary;
    43    (iii)  the  name, address and social security number of the designated
    44  beneficiary; and
    45    (iv) such other information as the program may require.
    46    (b) The comptroller may establish a nominal fee for such application.
    47    3. Any person, including the account owner, may make contributions  to
    48  the account after the account is opened.
    49    4. Contributions to accounts may be made only in cash.
    50    5.  An  account  owner may withdraw all or part of the balance from an
    51  account on sixty days notice or such shorter period as may be authorized
    52  under rules governing the program. Such rules shall  include  provisions
    53  that  will generally enable the determination as to whether a withdrawal
    54  is a nonqualified withdrawal or a qualified withdrawal.

        S. 1006                             4
     1    6. (a) An account owner may change the designated  beneficiary  of  an
     2  account  to another beneficiary who is qualified under the provisions of
     3  this article.
     4    (b)  Changes  in  designated  beneficiaries  and  transfers under this
     5  subdivision shall not be permitted to the extent that they  would  cause
     6  all  accounts for the same beneficiary to exceed the permitted aggregate
     7  maximum account balance.
     8    7. The program shall provide separate accounting for  each  designated
     9  beneficiary.
    10    8.  No account owner or designated beneficiary of any account shall be
    11  permitted to direct the investment of any contributions to an account or
    12  the earnings thereon.
    13    9. Neither an account owner nor a designated beneficiary  may  use  an
    14  interest in an account as security for a loan. Any pledge of an interest
    15  in an account shall be of no force and effect.
    16    10.  The  comptroller shall promulgate rules or regulations to prevent
    17  contributions on behalf of a designated  beneficiary  in  excess  of  an
    18  amount  that  would cause the aggregate account balance for all accounts
    19  for a designated beneficiary to exceed a  maximum  account  balance,  as
    20  established  from  time  to time by the comptroller. Such maximum amount
    21  shall reflect reasonable expenditures and shall be determined in consul-
    22  tation with the commissioner.
    23    11. (a) If there is any distribution from an account to any individual
    24  or for the benefit of  any  individual  during  a  calendar  year,  such
    25  distribution  shall  be reported to the Internal Revenue Service and the
    26  account owner, the designated beneficiary, or  the  distributee  to  the
    27  extent required by federal law or regulation.
    28    (b)  Statements  shall be provided to each account owner at least once
    29  each year within sixty days after the end of the twelve month period  to
    30  which  they  relate. The statement shall identify the contributions made
    31  during a preceding twelve month period, the total contributions made  to
    32  the  account  through the end of the period, the value of the account at
    33  the end of such period, distributions made during such  period  and  any
    34  other  information  that the comptroller shall require to be reported to
    35  the account owner.
    36    (c) Statements and information relating to accounts shall be  prepared
    37  and filed to the extent required by federal and state tax law.
    38    12. The program shall disclose the following information in writing to
    39  each account owner and prospective account owner of a NY ABLE account:
    40    (a) the terms and conditions for purchasing a NY ABLE account;
    41    (b) any restrictions on the substitution of beneficiaries;
    42    (c) the person or entity entitled to terminate the savings agreement;
    43    (d) the period of time during which a beneficiary may receive benefits
    44  under the savings agreement;
    45    (e)  the  terms  and  conditions  under  which  money may be wholly or
    46  partially withdrawn from the program, including, but not limited to, any
    47  reasonable charges and fees that may be imposed for withdrawal;
    48    (f) the probably tax consequences associated with contributions to and
    49  distributions from accounts; and
    50    (g) all other rights and  obligations  pursuant  to  NY  ABLE  savings
    51  agreements,  and  any  other  terms,  conditions,  and provisions deemed
    52  necessary and appropriate by the commissioner and the comptroller.
    53    13. NY ABLE savings agreements shall be subject to section  fourteen-c
    54  of  the  banking  law and the "truth-in-savings" regulations promulgated
    55  thereunder.
    56  § 84.09 Distribution requirements.

        S. 1006                             5
     1    1. (a) Participants shall be eligible  for  a  distribution  from  the
     2  accumulated  funds deferred to their NY ABLE savings account established
     3  pursuant to this article, in full and partial disbursement  options  for
     4  qualified expenses.
     5    (b)  The  commissioner shall promulgate rules and regulations defining
     6  qualified expenses which shall, at a minimum, include  expenses  associ-
     7  ated  with:  tuition  and  educational  material  and  services; housing
     8  expenses for a primary residence, including rent, real  property  taxes,
     9  and  utility  charges;  mass  transit, vehicle, and other transportation
    10  expenses; expenses related  to  obtaining  and  maintaining  employment;
    11  health, prevention, and wellness expenses, including insurance premiums,
    12  rehabilitation  services,  durable  medical  equipment,  and nutritional
    13  management; and other expenses which the commissioner shall deem  quali-
    14  fied in accordance with the purposes of this article.
    15    2.  Under  the NY ABLE savings account plan, amounts shall not be made
    16  available to participants or beneficiaries  unless  the  participant  or
    17  beneficiary  has  been  determined to be mentally disabled as defined in
    18  section 1.03 of this chapter.
    19  § 84.11 Powers of the comptroller.
    20    1. The comptroller may implement the NY ABLE savings  account  program
    21  through  use  of  financial  organizations  as  account depositories and
    22  managers.  Under the program, individuals may establish accounts direct-
    23  ly with an account depository.
    24    2. The comptroller may solicit proposals from financial  organizations
    25  to  act  as depositories and managers from the program. Financial organ-
    26  izations submitting proposals shall describe the  investment  instrument
    27  which  will be held in accounts. The comptroller shall select as program
    28  depositories and managers the financial  organization,  from  among  the
    29  bidding  financial organizations that demonstrates the most advantageous
    30  combination, both to potential program participants and this  state,  of
    31  the following factors:
    32    (a) Financial stability and integrity of the financial organization;
    33    (b) The safety of the investment instrument being offered;
    34    (c) The ability of the investment instrument to track increasing costs
    35  of higher education;
    36    (d) The ability of the financial organization to satisfy recordkeeping
    37  and reporting requirements;
    38    (e)  The  financial  organization's plan for promoting the program and
    39  the investment it is willing to make to promote the program;
    40    (f) The fees, if any, proposed to be charged to  persons  for  opening
    41  accounts;
    42    (g)  The  minimum  initial  deposit and minimum contributions that the
    43  financial organization will require;
    44    (h) The ability of banking organizations to  accept  electronic  with-
    45  drawals, including payroll deduction plans; and
    46    (i)  Other  benefits  to  the  state  or its residents included in the
    47  proposal, including fees payable to the state to cover expenses of oper-
    48  ation of the program.
    49    3. The comptroller may enter into a contract with a  financial  organ-
    50  ization.  Such financial organization management may provide one or more
    51  types of investment instrument.
    52    4. The comptroller may select more than one financial organization for
    53  the program.
    54    5. A management contract shall include, at a minimum, terms  requiring
    55  the financial organization to:

        S. 1006                             6
     1    (a)  Take  any  action required to keep the program in compliance with
     2  requirements of section 84.07 of this article;
     3    (b)  Keep  adequate  records of each account, keep each account segre-
     4  gated from each other account, and provide the comptroller with informa-
     5  tion as required;
     6    (c) If there is more than one program manager, provide the comptroller
     7  with such information necessary to determine compliance;
     8    (d) Provide the comptroller or his or her designee access to the books
     9  and records of the program manager to the  extent  needed  to  determine
    10  compliance with the contract;
    11    (e) Hold all accounts for the benefit of the account owner;
    12    (f)  Be  audited  at  least  annually  by  a  firm of certified public
    13  accountants selected by the program manager and that the results of such
    14  audit be provided to the comptroller; and
    15    (g) Provide the comptroller with copies of all regulatory filings  and
    16  reports  made  by it during the term of the management contract or while
    17  it is holding any accounts, other than confidential filings  or  reports
    18  that will not become part of the program. The program manager shall make
    19  available  for  review  by  the  comptroller the results of any periodic
    20  examination of such manager by any state or federal banking,  insurance,
    21  or  securities  commission,  except  to  the  extent that such report or
    22  reports may not be disclosed under applicable law or the rules  of  such
    23  commission.
    24    6. The comptroller may provide that an audit shall be conducted of the
    25  operations  and financial position of the program depository and manager
    26  at any time if the comptroller has any reason to be concerned about  the
    27  financial  position,  the  recordkeeping  practices,  or  the  status of
    28  accounts of such program depository and manager.
    29    7. During the term of any contract with a program manager,  the  comp-
    30  troller shall conduct an examination of such manager and its handling of
    31  accounts.    Such  examination shall be conducted at least biennially if
    32  such manager is not otherwise subject to  periodic  examination  by  the
    33  superintendent  of  financial  services,  the  federal deposit insurance
    34  corporation or other similar entity.
    35    8. (a) If selection of a financial organization as a  program  manager
    36  or depository is not renewed, after the end of its term:
    37    (i) Accounts previously established and held in investment instruments
    38  at such financial organization may be terminated;
    39    (ii) Additional contributions may be made to such accounts;
    40    (iii)  No new accounts may be placed with such financial organization;
    41  and
    42    (iv) Existing accounts held by such depository shall remain subject to
    43  all oversight and reporting requirements established by the comptroller.
    44    (b) If the  comptroller  terminates  a  financial  organization  as  a
    45  program  manager or depository, he or she shall take custody of accounts
    46  held by such financial organization and shall seek to promptly  transfer
    47  such  accounts  to  another financial organization that is selected as a
    48  program manager or depository and into investment instruments as similar
    49  to the original instruments as possible.
    50    9. The comptroller may enter into such contracts as it deems necessary
    51  and proper for the implementation of the program.
    52    § 4. Section 237 of the banking law is amended by adding a new  subdi-
    53  vision 9 to read as follows:
    54    9.  Subject  to  any  regulations  and  restrictions prescribed by the
    55  superintendent of financial services, a savings bank shall have power to
    56  act as trustee of a New York achieving  a  better  life  experience  (NY

        S. 1006                             7
     1  ABLE) savings account established pursuant to article eighty-four of the
     2  mental  hygiene law, provided that the provisions of the written govern-
     3  ing instrument creating the trust require the funds of such trust to  be
     4  invested exclusively in deposits in savings banks.
     5    § 5. Subsection (c) of section 612 of the tax law is amended by adding
     6  two new paragraphs 42 and 43 to read as follows:
     7    (42) Contributions made during the taxable year by an account owner to
     8  one  or more "NY ABLE" accounts established under article eighty-four of
     9  the mental hygiene law, provided, however that such exclusion  shall  be
    10  available only to the account owner and not to any other person.
    11    (43)  Distributions for qualified expenses of a designated beneficiary
    12  from a "NY ABLE" account established under article  eighty-four  of  the
    13  mental hygiene law, to the extent includible in gross income for federal
    14  income tax purposes.
    15    § 6. This act shall take effect on the one hundred eightieth day after
    16  it shall have become a law; provided, however, that effective immediate-
    17  ly,  the  addition,  amendment and/or repeal of any rules or regulations
    18  necessary for the implementation of this act on its effective  date  are
    19  authorized  and  directed  to  be  made  and completed on or before such
    20  effective date.
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