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.
STATE OF NEW YORK
________________________________________________________________________
7937
IN SENATE
September 3, 2014
___________
Introduced by Sen. CARLUCCI -- read twice and ordered printed, and when
printed to be committed to the Committee on Rules
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
14 NEW YORK ACHIEVING A BETTER LIFE EXPERIENCE SAVINGS ACCOUNT ACT
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.
25 As used in this article: 1. "Commissioner" means the commissioner of
26 the office for people with developmental disabilities.
27 2. The term "financial organization" means an organization authorized
28 to do business in the state of New York and (a) which is an authorized
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD13325-05-4
S. 7937 2
1 fiduciary to act as a trustee pursuant to the provisions of an act of
2 congress entitled "Employee Retirement Income Security Act of 1974" as
3 such provisions may be amended from time to time, or an insurance compa-
4 ny; and (b) (i) is licensed or chartered by the state insurance depart-
5 ment, (ii) is licensed or chartered by the state banking department,
6 (iii) is chartered by an agency of the federal government, (iv) is
7 subject to the jurisdiction and regulation of the securities and
8 exchange commission of the federal government, or (v) is any other enti-
9 ty otherwise authorized to act in this state as a trustee pursuant to
10 the provisions of an act of congress entitled "Employee Retirement
11 Income Security Act of 1974" as such provisions may be amended from time
12 to time.
13 3. "Account" or "NY ABLE account" shall mean an individual savings
14 account established in accordance with the provisions of this article.
15 4. "Account owner" shall mean a person who enters into a savings
16 agreement pursuant to the provisions of this article, including a person
17 who enters into such an agreement as a fiduciary or agent on behalf of a
18 trust, estate, partnership, association, company or corporation. The
19 account owner may also be the designated beneficiary of the account.
20 5. "Designated beneficiary" shall mean, with respect to an account or
21 accounts, the intellectually or developmentally disabled individual
22 designated as the individual whose qualified expenses are expected to be
23 paid from the account or accounts.
24 6. "Qualified expenses" shall mean any tuition, and education materi-
25 al and services, housing expenses for a primary residence, including
26 rent, real property taxes, and utility charges, mass transit, vehicle,
27 and other transportation expenses, expenses related to obtaining and
28 maintaining employment; health, prevention and wellness, expenses,
29 including insurance premiums, rehabilitation services, durable medical
30 equipment, and nutritional management; and other expenses which the
31 commissioner shall deem qualified in accordance with the purpose of this
32 article and which are used for the direct benefit of an intellectually
33 or developmentally disabled individual.
34 7. "Nonqualified withdrawal" shall mean a withdrawal from an account
35 other than a qualified withdrawal or a withdrawal made as the result of
36 the death or disability of the designated beneficiary of an account.
37 8. "Management contract" shall mean the contract executed by the comp-
38 troller and a financial organization selected to act as a depository and
39 manager of the program.
40 9. "Savings agreement" shall mean an agreement between the comptroller
41 or a financial organization and the account owner.
42 10. "Program manager" shall mean a financial organization selected by
43 the comptroller to act as a depository and manager of the program.
44 11. "Intellectually or developmentally disabled" as defined by the
45 commissioner of the office for people with developmental disabilities in
46 consultation with the commissioner.
47 § 84.05 Establishment of plan.
48 1. The commissioner shall establish a "NY ABLE" account plan for all
49 eligible individuals and families for the purpose of supporting individ-
50 uals with disabilities to maintain health, independence, and quality of
51 life. The commissioner shall promulgate any and all rules and regu-
52 lations necessary for the implementation of this article.
53 2. The commissioner shall enter into written agreements with one or
54 more financial organizations to administer the NY ABLE savings account
55 plan for eligible individuals and families and to invest funds held
56 pursuant to such plan. The commissioner shall establish reporting
S. 7937 3
1 requirements for such financial organizations including but not limited
2 to reports to the commissioner, participating individuals and families,
3 and participating employers, regarding the fiscal status of NY ABLE
4 savings accounts.
5 3. The rules and regulations promulgated by the commissioner shall
6 establish standards for the selection of financial organizations author-
7 ized to do business in this state to administer in such plans, includ-
8 ing, but not limited to, the following criteria: (a) rates of commis-
9 sion, brokerage and other fees, administrative expenses and related
10 service charges imposed by the financial organization; (b) variety of
11 types of investment opportunities offered by the financial organization
12 and/or among the financial organizations selected and the ability to
13 transfer among such opportunities; (c) the stability of the financial
14 organization as evidenced by experience, reputation, assets and hold-
15 ings, ability to guarantee specific rates of return; (d) ability to
16 comply with reporting requirements to the commissioner and to partic-
17 ipants in such a plan; and (e) such other factors which would be consid-
18 ered by a prudent investor in such a plan.
19 4. NY ABLE savings accounts shall be maintained by financial organiza-
20 tions under written agreement with the commissioner. Such financial
21 organizations shall be solely responsible for distributions to partic-
22 ipants pursuant to this article.
23 5. The commissioner shall establish a process for certification of
24 mental disability for the purpose of establishing the validity of
25 accounts and expenditures from accounts established under this article.
26 § 84.07 Program requirements.
27 1. "NY ABLE" accounts established pursuant to the provisions of this
28 article shall be governed by the provisions of this section.
29 2. A NY ABLE account may be opened by any person who desires to save
30 money for the payment of the qualified living expenses of the designated
31 intellectually or developmentally disabled beneficiary. Such person who
32 opens a NY ABLE account shall be considered the account owner as set
33 forth in this article.
34 (a) An application for such account shall be in the form prescribed by
35 the program and contain the following:
36 (i) the name, address and social security number or employer identifi-
37 cation number of the account owner;
38 (ii) the designation of a designated beneficiary;
39 (iii) the name, address and social security number of the designated
40 beneficiary; and
41 (iv) such other information as the program may require.
42 (b) The comptroller may establish a nominal fee for such application.
43 3. Any person, including the account owner, may make contributions to
44 the account after the account is opened.
45 4. Contributions to accounts may be made only in cash.
46 5. An account owner may withdraw all or part of the balance from an
47 account on sixty days notice or such shorter period as may be authorized
48 under rules governing the program. Such rules shall include provisions
49 that will generally enable the determination as to whether a withdrawal
50 is a nonqualified withdrawal or a qualified withdrawal.
51 6. (a) An account owner may change the designated beneficiary of an
52 account to another beneficiary who is qualified under the provisions of
53 this article.
54 (b) Changes in designated beneficiaries and transfers under this
55 subdivision shall not be permitted to the extent that they would cause
S. 7937 4
1 all accounts for the same beneficiary to exceed the permitted aggregate
2 maximum account balance.
3 7. The program shall provide separate accounting for each designated
4 beneficiary.
5 8. No account owner or designated beneficiary of any account shall be
6 permitted to direct the investment of any contributions to an account or
7 the earnings thereon.
8 9. Neither an account owner nor a designated beneficiary may use an
9 interest in an account as security for a loan. Any pledge of an interest
10 in an account shall be of no force and effect.
11 10. The comptroller shall promulgate rules or regulations to prevent
12 contributions on behalf of a designated beneficiary in excess of an
13 amount that would cause the aggregate account balance for all accounts
14 for a designated beneficiary to exceed a maximum account balance, as
15 established from time to time by the comptroller. Such maximum amount
16 shall reflect reasonable expenditures and shall be determined in consul-
17 tation with the commissioner.
18 11. (a) If there is any distribution from an account to any individual
19 or for the benefit of any individual during a calendar year, such
20 distribution shall be reported to the Internal Revenue Service and the
21 account owner, the designated beneficiary, or the distributee to the
22 extent required by federal law or regulation.
23 (b) Statements shall be provided to each account owner at least once
24 each year within sixty days after the end of the twelve month period to
25 which they relate. The statement shall identify the contributions made
26 during a preceding twelve month period, the total contributions made to
27 the account through the end of the period, the value of the account at
28 the end of such period, distributions made during such period and any
29 other information that the comptroller shall require to be reported to
30 the account owner.
31 (c) Statements and information relating to accounts shall be prepared
32 and filed to the extent required by federal and state tax law.
33 12. The program shall disclose the following information in writing to
34 each account owner and prospective account owner of a NY ABLE account:
35 (a) the terms and conditions for purchasing a NY ABLE account;
36 (b) any restrictions on the substitution of beneficiaries;
37 (c) the person or entity entitled to terminate the savings agreement;
38 (d) the period of time during which a beneficiary may receive benefits
39 under the savings agreement;
40 (e) the terms and conditions under which money may be wholly or
41 partially withdrawn from the program, including, but not limited to, any
42 reasonable charges and fees that may be imposed for withdrawal;
43 (f) the probably tax consequences associated with contributions to and
44 distributions from accounts; and
45 (g) all other rights and obligations pursuant to NY ABLE savings
46 agreements, and any other terms, conditions, and provisions deemed
47 necessary and appropriate by the commissioner and the comptroller.
48 13. NY ABLE savings agreements shall be subject to section fourteen-c
49 of the banking law and the "truth-in-savings" regulations promulgated
50 thereunder.
51 § 84.09 Distribution requirements.
52 1. (a) Participants shall be eligible for a distribution from the
53 accumulated funds deferred to their NY ABLE savings account established
54 pursuant to this article, in full and partial disbursement options for
55 qualified expenses.
S. 7937 5
1 (b) The commissioner shall promulgate rules and regulations defining
2 qualified expenses which shall, at a minimum, include expenses associ-
3 ated with: tuition and educational material and services; housing
4 expenses for a primary residence, including rent, real property taxes,
5 and utility charges; mass transit, vehicle, and other transportation
6 expenses; expenses related to obtaining and maintaining employment;
7 health, prevention, and wellness expenses, including insurance premiums,
8 rehabilitation services, durable medical equipment, and nutritional
9 management; and other expenses which the commissioner shall deem quali-
10 fied in accordance with the purposes of this article.
11 2. Under the NY ABLE savings account plan, amounts shall not be made
12 available to participants or beneficiaries unless the participant or
13 beneficiary has been determined to be mentally disabled as defined in
14 section 1.03 of this chapter.
15 § 84.11 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 direct-
19 ly with an account depository.
20 2. The comptroller may solicit proposals from financial organizations
21 to act as depositories and managers from the program. Financial organ-
22 izations submitting proposals shall describe the investment instrument
23 which will be held in accounts. The comptroller shall select as program
24 depositories and managers 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 higher education;
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 84.07 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;
S. 7937 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 or 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 of financial services, the federal deposit insurance
29 corporation or other similar 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 eighty-four of the
53 mental hygiene law, provided that the provisions of the written govern-
54 ing instrument creating the trust require the funds of such trust to be
55 invested exclusively in deposits in savings banks.
S. 7937 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 eighty-four of
5 the mental hygiene law, provided, however that such exclusion shall be
6 available 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 eighty-four of the
9 mental hygiene law, to the extent includible in gross income for federal
10 income tax 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.
