A07767 Summary:

COSPNSRLinares, Palmesano, Schimel
Add Art 84 SS84.01 - 84.11, Ment Hyg L; amd S612, Tax L; amd S366, Soc Serv L; add S99-x, St Fin 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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A07767 Actions:

05/26/2015referred to mental health
06/02/2015reported referred to ways and means
06/08/2015amend and recommit to ways and means
06/08/2015print number 7767a
06/11/2015amend (t) and recommit to ways and means
06/11/2015print number 7767b
06/16/2015reported referred to rules
06/18/2015rules report cal.679
06/18/2015substituted by s4472d
 05/04/2015PRINT NUMBER 4472A
 06/08/2015PRINT NUMBER 4472B
 06/09/2015PRINT NUMBER 4472C
 06/18/2015PASSED SENATE
 06/18/2015referred to ways and means
 06/18/2015substituted for a7767b
 06/18/2015ordered to third reading rules cal.679
 06/18/2015passed assembly
 06/18/2015returned to senate
 12/22/2015SIGNED CHAP.576
 12/22/2015APPROVAL MEMO.30
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A07767 Text:

                STATE OF NEW YORK
                               2015-2016 Regular Sessions
                   IN ASSEMBLY
                                      May 26, 2015
        Introduced  by  M. of A. GUNTHER, LINARES -- Multi-Sponsored by -- M. of
          A. CUSICK -- read once and referred to the Committee on Mental  Health
          -- reported and referred to the Committee on Ways and Means -- commit-
          tee  discharged, bill amended, ordered reprinted as amended and recom-
          mitted to said committee -- again reported from  said  committee  with
          amendments,  ordered  reprinted  as  amended  and  recommitted to said
        AN ACT to amend the mental hygiene law, the tax law, the social services
          law and the state finance law, in relation to establishing the NY ABLE
          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 Powers and duties of the comptroller.
    18          84.07 NY ABLE account advisory council.
    19          84.09 Program requirements.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 7767--B                          2
     1          84.11 Distribution requirements.
     2  § 84.01 Short title.
     3    This  article shall be known and may be cited as the "New York achiev-
     4  ing a better life experience (NY ABLE) savings account act".
     5  § 84.03 Definitions.
     6    As used in this article:
     7    1. The term "financial organization" means an organization  authorized
     8  to  do  business in the state of New York and which:  (a) is licensed or
     9  chartered by the department of financial services; (b)  is  licensed  or
    10  chartered  by  an agency of the federal government; or (c) is subject to
    11  the jurisdiction and regulation of the securities and  exchange  commis-
    12  sion of the federal government.
    13    2.  "Account"  or  "NY  ABLE account" shall mean an individual savings
    14  account established in accordance with the provisions of this article.
    15    3. "Account owner" shall mean a person who  opens  a  savings  account
    16  pursuant  to the provisions of this article.  The account owner may also
    17  be the designated beneficiary of the account.
    18    4. "Designated beneficiary" shall mean, with respect to an account  or
    19  accounts,  any  individual  who  is  an "eligible individual" as defined
    20  under paragraph (1) of subsection (e) of section 529A  of  the  Internal
    21  Revenue  Code of 1986, as amended, or any regulations promulgated there-
    22  under and whose qualified expenses are expected  to  be  paid  from  the
    23  account  or  accounts.   A designated beneficiary shall be a resident of
    24  New York state or a resident of a state that: (a) does not have a quali-
    25  fied ABLE program recognized under section 529-A of the Internal Revenue
    26  Code of 1986, as amended; and (b) has entered into a contract  with  New
    27  York  state to provide residents of the contracting state with access to
    28  New York state's ABLE program.
    29    5. "Qualified expenses" shall mean any  qualified  disability  expense
    30  included  in  paragraph  (5)  of  subsection  (e) of section 529A of the
    31  Internal Revenue Code of 1986, as amended, or any regulations promulgat-
    32  ed thereunder.
    33    6. "Nonqualified withdrawal" shall mean a withdrawal from  an  account
    34  for  other  than a qualified expense, or a withdrawal made as the result
    35  of the death or disability of the designated beneficiary of an account.
    36    7. "Management contract" shall mean the contract executed by the comp-
    37  troller and a financial organization selected to act as a depository and
    38  manager of the program.
    39    8. "Savings agreement" shall mean an agreement between the comptroller
    40  or a financial organization and the account owner.
    41    9. "Program manager" shall mean a financial organization  selected  by
    42  the comptroller to act as a depository and manager of the program.
    43  § 84.05 Powers and duties of the comptroller.
    44    1.  The  comptroller  shall  establish  a NY ABLE account plan for all
    45  eligible individuals and families for the purpose of supporting individ-
    46  uals with disabilities to maintain health, independence, and quality  of
    47  life.  The  comptroller  is  hereby authorized to promulgate any and all
    48  rules and regulations necessary for the implementation of  this  article
    49  in  consultation  with  the  commissioners of the office for people with
    50  developmental disabilities, the office of mental health, the  department
    51  of health, and the office of temporary and disability assistance.
    52    2.  The  comptroller may implement the NY ABLE savings account program
    53  through use of third party vendors as administrators of  such  accounts,
    54  and financial organizations as account depositories and managers.  Under
    55  the program, individuals may establish accounts directly with an account
    56  depository.

        A. 7767--B                          3
     1    3.  The comptroller may solicit proposals from financial organizations
     2  to act as depositories and managers from the program.  Financial  organ-
     3  izations  submitting  proposals shall describe the investment instrument
     4  which will be held in accounts. The comptroller shall select as  program
     5  depositories  and  managers  the  financial organization, from among the
     6  bidding financial organizations, that demonstrates the most advantageous
     7  combination, both to potential program participants and this  state,  of
     8  the following factors:
     9    (a) Financial stability and integrity of the financial organization;
    10    (b) The safety of the investment instrument being offered;
    11    (c) The ability of the investment instrument to track increasing costs
    12  of obtaining care for individuals with disabilities;
    13    (d) The ability of the financial organization to satisfy recordkeeping
    14  and reporting requirements;
    15    (e)  The  financial  organization's plan for promoting the program and
    16  the investment it is willing to make to promote the program;
    17    (f) The fees, if any, proposed to be charged to persons for opening or
    18  maintaining accounts;
    19    (g) The minimum initial deposit and  minimum  contributions  that  the
    20  financial organization will require;
    21    (h)  The  ability  of banking organizations to accept electronic with-
    22  drawals, including payroll deduction plans; and
    23    (i) Other benefits to the state  or  its  residents  included  in  the
    24  proposal, including fees payable to the state to cover expenses of oper-
    25  ation of the program.
    26    4.  The  comptroller may enter into a contract with a financial organ-
    27  ization. Such financial organization management may provide one or  more
    28  types of investment instrument.
    29    5. The comptroller may select more than one financial organization for
    30  the program.
    31    6.  A management contract shall include, at a minimum, terms requiring
    32  the financial organization to:
    33    (a) Take any action required to keep the program  in  compliance  with
    34  requirements  of  section  84.09  of  this  article  and any actions not
    35  contrary to its contract to manage the program to qualify as  a  "Quali-
    36  fied ABLE account" under subsection (1) of paragraph (b) of section 529A
    37  of the Internal Revenue Code of 1986, as amended.
    38    (b)  Keep  adequate  records of each account, keep each account segre-
    39  gated from each other account, and provide the comptroller with informa-
    40  tion as required;
    41    (c) compile and total information contained in statements required  to
    42  be  prepared under section 84.09 of this article and provide such compi-
    43  lations to the comptroller.
    44    (d) If there is more than one program manager, provide the comptroller
    45  with such information necessary to determine compliance;
    46    (e) Provide the comptroller or his or her designee access to the books
    47  and records of the program manager to the  extent  needed  to  determine
    48  compliance with the contract;
    49    (f) Hold all accounts for the benefit of the account owner;
    50    (g)  Be  audited  at  least  annually  by  a  firm of certified public
    51  accountants selected by the program manager and that the results of such
    52  audit be provided to the comptroller; and
    53    (h) Provide the comptroller with copies of all regulatory filings  and
    54  reports  made  by it during the term of the management contract or while
    55  it is holding any accounts, other than confidential filings  or  reports
    56  that will not become part of the program. The program manager shall make

        A. 7767--B                          4
     1  available  for  review  by  the  comptroller the results of any periodic
     2  examination of such manager by any state or federal banking,  insurance,
     3  or  securities  commission,  except  to  the  extent that such report or
     4  reports  may  not be disclosed under applicable law or the rules of such
     5  commission.
     6    7. The comptroller may provide that an audit shall be conducted of the
     7  operations and financial position of the program depository and  manager
     8  at  any time if the comptroller has any reason to be concerned about the
     9  financial position,  the  recordkeeping  practices,  or  the  status  of
    10  accounts of such program depository and manager.
    11    8.  During  the term of any contract with a program manager, the comp-
    12  troller shall conduct an examination of such manager and its handling of
    13  accounts.  Such examination shall be conducted at  least  biennially  if
    14  such  manager  is  not  otherwise subject to periodic examination by the
    15  superintendent of financial  services,  the  federal  deposit  insurance
    16  corporation or other similar entity.
    17    9.  (a)  If selection of a financial organization as a program manager
    18  or depository is not renewed, after the end of its term:
    19    (i) Accounts previously established and held in investment instruments
    20  at such financial organization may be terminated;
    21    (ii) Additional contributions may be made to such accounts;
    22    (iii) No new accounts may be placed with such financial  organization;
    23  and
    24    (iv) Existing accounts held by such depository shall remain subject to
    25  all oversight and reporting requirements established by the comptroller.
    26    (b)  If  the  comptroller  terminates  a  financial  organization as a
    27  program manager or depository, he or she shall take custody of  accounts
    28  held  by such financial organization and shall seek to promptly transfer
    29  such accounts to another financial organization that is  selected  as  a
    30  program manager or depository and into investment instruments as similar
    31  to the original instruments as possible.
    32    10.  The  comptroller may enter into such contracts as it deems neces-
    33  sary and proper for the implementation of the program.
    34  § 84.07 NY ABLE account advisory council.
    35    1. The NY ABLE account advisory  council  is  hereby  established  and
    36  shall  consist  of  the  following persons or their designees: the comp-
    37  troller, the commissioner of the office of mental  health,  the  commis-
    38  sioner  of  the  office  for people with developmental disabilities, the
    39  commissioner of the department of  health,  the  superintendent  of  the
    40  department  of financial services, the commissioner of the department of
    41  taxation and finance, the commissioner of the office of temporary  disa-
    42  bility  assistance, three individuals appointed by the governor, and two
    43  individuals each by the temporary president of the  senate  and  by  the
    44  speaker of the assembly. Such executive and legislative appointees shall
    45  have  knowledge,  skill  and expertise in issues relating to individuals
    46  with disabilities; expertise in services to persons  with  disabilities;
    47  or  knowledge  in  management  and support of the fiscal affairs of such
    48  disabilities.
    49    2. The members shall be appointed for a term of three years and  shall
    50  be representative of all geographic areas of the state.
    51    3. The advisory council shall:
    52    (a)  Study  and  review the work of the comptroller in relation to the
    53  establishment of the NY ABLE account program;
    54    (b) Advise the comptroller and make recommendations for  the  improve-
    55  ment of the NY ABLE account program;

        A. 7767--B                          5
     1    (c)  Advise  the  comptroller  on  legislative and regulatory activity
     2  which may be required for compliance; and
     3    (d)  Advise  the  comptroller  on  the  development of materials to be
     4  provided to account owners, prospective account owners,  and  designated
     5  beneficiaries  in  accordance with subdivision fourteen of section 84.09
     6  of this article.
     7    4. The advisory council shall meet at least four times  in  each  full
     8  calendar year during the first three years of the implementation of ABLE
     9  accounts,  annually thereafter, and additionally upon the request of the
    10  comptroller.
    11    5. The members of the advisory council shall receive  no  compensation
    12  for  their  services as members, but each shall be allowed the necessary
    13  and actual expenses incurred in the performance of  his  or  her  duties
    14  under this section.
    15  § 84.09 Program requirements.
    16    1.  "NY  ABLE" accounts established pursuant to the provisions of this
    17  article shall be governed by the provisions of this section.
    18    2. A NY ABLE account may be opened by any person who desires  to  save
    19  money  for  the payment of the qualified living expenses of a designated
    20  beneficiary. Such person who opens a NY ABLE account shall be considered
    21  the account owner as set forth in this article.
    22    (a) An application for such account shall be in the form prescribed by
    23  the program and contain the following:
    24    (i) the name, address and social security number or employer identifi-
    25  cation number of the account owner;
    26    (ii) the designation of a designated beneficiary;
    27    (iii) the name, address and social security number of  the  designated
    28  beneficiary; and
    29    (iv) such other information as the program may require.
    30    (b) The comptroller may establish a nominal fee for such application.
    31    3.  An account owner may own only one NY ABLE account unless otherwise
    32  permitted by section 529A of the  Internal  Revenue  Code  of  1986,  as
    33  amended.
    34    4.  Any person, including the account owner, may make contributions to
    35  the account after the account is opened.
    36    5. Contributions to accounts may be made only in cash.
    37    6. Contributions to a NY ABLE account shall not exceed  the  limit  on
    38  annual  contributions  established under paragraph (2) of subsection (b)
    39  of section 529A of the Internal Revenue Code of 1986, as amended.
    40    7. An account owner may withdraw all or part of the  balance  from  an
    41  account on sixty days notice or such shorter period as may be authorized
    42  under  rules  governing the program. Such rules shall include provisions
    43  that will generally enable the determination as to whether a  withdrawal
    44  is  a  nonqualified  withdrawal  or a qualified withdrawal. Nonqualified
    45  withdrawals shall be subject to any penalties imposed under section 529A
    46  of the internal revenue code of 1986, as amended.
    47    8. An account owner  may  change  the  designated  beneficiary  of  an
    48  account  to another beneficiary who is qualified under the provisions of
    49  this article.
    50    9. The program shall provide a separate accounting for each designated
    51  beneficiary.
    52    10. An account owner shall be permitted to direct  the  investment  of
    53  any contributions to an account or the earnings thereon no more than two
    54  times in a calendar year.

        A. 7767--B                          6
     1    11.  Neither  an account owner nor a designated beneficiary may use an
     2  interest in an account as security for a loan. Any pledge of an interest
     3  in an account shall be of no force and effect.
     4    12.  The  comptroller shall promulgate rules or regulations to prevent
     5  contributions on behalf of a designated  beneficiary  in  excess  of  an
     6  amount  that  would cause the aggregate account balance for all accounts
     7  for a designated beneficiary to exceed a  maximum  account  balance,  as
     8  established  from  time  to time by the comptroller. Such maximum amount
     9  shall reflect reasonable expenditures and shall be determined in accord-
    10  ance with any applicable state or federal law, rule, or regulation. Such
    11  maximum amount shall not exceed  one  hundred  thousand  dollars  unless
    12  otherwise permitted by law.
    13    13. (a) If there is any distribution from an account to any individual
    14  or  for  the  benefit  of  any  individual  during a calendar year, such
    15  distribution shall be reported to the Internal Revenue Service  and  the
    16  account  owner,  the  designated  beneficiary, or the distributee to the
    17  extent required by federal law or regulation.
    18    (b) Statements shall be provided to each account owner at  least  once
    19  each  year within sixty days after the end of the twelve month period to
    20  which they relate. The statement shall identify the  contributions  made
    21  during  a preceding twelve month period, the total contributions made to
    22  the account through the end of the period, the value of the  account  at
    23  the  end  of  such period, distributions made during such period and any
    24  other information that the comptroller shall require to be  reported  to
    25  the account owner.
    26    (c)  Statements and information relating to accounts shall be prepared
    27  and filed to the extent required by federal and state tax law.
    28    14. The program shall disclose the following information in writing to
    29  each account owner and prospective account owner of a NY ABLE account:
    30    (a) the terms and conditions for purchasing a NY ABLE account;
    31    (b) any restrictions on the substitution of beneficiaries;
    32    (c) the person or entity entitled to terminate the savings agreement;
    33    (d) the period of time during which a beneficiary may receive benefits
    34  under the savings agreement;
    35    (e) the terms and conditions  under  which  money  may  be  wholly  or
    36  partially withdrawn from the program, including, but not limited to, any
    37  reasonable charges and fees that may be imposed for withdrawal;
    38    (f) the probable tax consequences associated with contributions to and
    39  distributions from accounts; and
    40    (g)  all  other  rights  and  obligations  pursuant to NY ABLE savings
    41  agreements, including but not limited to the potential impact  on  means
    42  tested  programs,  that  upon the death of the beneficiary any remaining
    43  balance may be subject to state recovery for Medicaid payments  and  any
    44  other terms, conditions, and provisions deemed necessary and appropriate
    45  by the commissioner, the advisory council, and the comptroller.
    46    15.  NY ABLE savings agreements shall be subject to section fourteen-c
    47  of the banking law and the  "truth-in-savings"  regulations  promulgated
    48  thereunder.
    49    16.  Notwithstanding  any other provisions of law, rule, or regulation
    50  to the contrary, assets contained in NY ABLE account, that is in compli-
    51  ance with all applicable state and federal laws, rules, and regulations,
    52  shall not be used in determining the eligibility of a designated benefi-
    53  ciary for any federal, state, or local means-tested program.
    54    17. Subject to any outstanding payments due for  qualified  disability
    55  expenses,  upon  the  death  of  the designated beneficiary, all amounts
    56  remaining will be subject  to  state  recovery  for  medical  assistance

        A. 7767--B                          7
     1  payments  made on behalf of the beneficiary after the date of establish-
     2  ment of the account.
     3    18. Nothing in this article shall create or be construed to create any
     4  obligation of the comptroller, the state, or any agency or instrumental-
     5  ity  of  the  state to guarantee for the benefit of any account owner or
     6  designated beneficiary with respect to:
     7    (a) the rate of interest or other return on any account; and
     8    (b) the payment of interest or other return on any account.
     9  § 84.11 Distribution requirements.
    10    Designated beneficiaries shall be eligible for a distribution from the
    11  accumulated funds deferred to their NY ABLE savings account  established
    12  pursuant  to  this article, in full and partial disbursement options for
    13  qualified expenses.
    14    § 4. Subsection (b) of section 612 of the tax law is amended by adding
    15  a new paragraph 42 to read as follows:
    16    (42) Distributions received during the taxable year  by  a  designated
    17  beneficiary  of  a  "NY  ABLE  account"  established  under the New York
    18  achieving a better life experience  savings  account  act  provided  for
    19  under  article eighty-four of the mental hygiene law, to the extent such
    20  distributions are nonqualified withdrawals within the meaning of  subdi-
    21  vision six of section 84.03 of such law.
    22    § 5. Subsection (c) of section 612 of the tax law is amended by adding
    23  two new paragraphs 42 and 43 to read as follows:
    24    (42) Contributions made during the taxable year by an account owner to
    25  one  or more "NY ABLE" accounts established under article eighty-four of
    26  the mental hygiene law, provided, however that such exclusion  shall  be
    27  available only to the account owner and not to any other person.
    28    (43)  Distributions for qualified expenses of a designated beneficiary
    29  from a "NY ABLE" account established under article  eighty-four  of  the
    30  mental hygiene law, to the extent includible in gross income for federal
    31  income tax purposes.
    32    §  6.  Paragraph  (a)  of  subdivision  2 of section 366 of the social
    33  services law is amended by adding a  new  subparagraph  11  to  read  as
    34  follows:
    35    (11)  subject  to the availability of federal financial participation,
    36  any amount, including earnings thereon, in a qualified NY  ABLE  account
    37  as  established  pursuant  to  article eighty-four of the mental hygiene
    38  law, any contributions to such NY ABLE account, and any distribution for
    39  qualified disability expenses from such account; provided however,  that
    40  such  exemption  shall  be  consistent with section 529A of the Internal
    41  Revenue Code of 1986, as amended.
    42    § 7. The state finance law is amended by adding a new section 99-x  to
    43  read as follows:
    44    §  99-x. New York achieving a better life experience (NY ABLE) savings
    45  program trust fund. 1. There is hereby established in the  sole  custody
    46  of  the  state  comptroller  a  special fund to be known as the New York
    47  achieving a better life experience (NY ABLE) savings program trust fund.
    48  All payments from such fund shall be made  in  accordance  with  article
    49  eighty-four of the mental hygiene law.
    50    2. The fund shall be a trust fund and shall consist of a trust account
    51  and  an  operating  account.  The  trust  account  shall include amounts
    52  received by the NY ABLE savings program  pursuant  to  NY  ABLE  savings
    53  agreements, administrative charges, fees, and all other amounts received
    54  by  the  program  from other sources, and interest and investment income
    55  earned by the trust fund. The comptroller shall, from time to time, make
    56  transfers from the trust account to the operating account for the  imme-

        A. 7767--B                          8
     1  diate payment of obligations under NY ABLE savings agreements, operating
     2  expenses and administrative costs of the NY ABLE savings program. Admin-
     3  istrative  costs shall be paid out of the operating account according to
     4  the  terms  and  conditions  established  pursuant  to the provisions of
     5  section 84.05 of the mental hygiene law.
     6    3. (a) The comptroller, as trustee, shall invest  the  assets  of  the
     7  trust fund in investments authorized by article four-A of the retirement
     8  and  social security law, provided however, that:  (i) the provisions of
     9  paragraph (a) of subdivision two of section one hundred seventy-seven of
    10  the retirement and social security law shall not apply  except  for  the
    11  first  clause  of subparagraph (ii) of such paragraph; and (ii) notwith-
    12  standing the provisions of subdivision  seven  of  section  one  hundred
    13  seventy-seven of the retirement and social security law or any other law
    14  to  the  contrary,  the  assets of the trust fund may be invested in any
    15  funding agreement issued in accordance with section three  thousand  two
    16  hundred  twenty-two  of  the  insurance law by a domestic life insurance
    17  company or a foreign life  insurance  company  doing  business  in  this
    18  state,  subject  to  the  following:  (1)  such  a funding agreement may
    19  provide for a guaranteed minimum rate of  return;  (2)  such  a  funding
    20  agreement  may  be  allocated  as either a separate account or a general
    21  account of the issuer, as the comptroller may decide; (3) total  invest-
    22  ments of the trust fund pursuant to this paragraph in any funding agree-
    23  ments issued by a single life insurance company which are allocated as a
    24  general  account of the issuer shall not, in the aggregate, exceed three
    25  hundred fifty million dollars; and (4) no assets of the trust fund shall
    26  be invested in any such funding agreement unless, at the  time  of  such
    27  investment,  the general obligations or financial strength of the issuer
    28  have received either  the  highest  or  second  highest  rating  by  two
    29  nationally  recognized  rating  services or by one nationally recognized
    30  rating service in the event that only one such service rates such  obli-
    31  gations.
    32    (b)  Trust fund assets shall be kept separate and shall not be commin-
    33  gled with other assets, except as provided herein. The  comptroller  may
    34  enter  into  contracts  to provide for investment advice and management,
    35  custodial services, and other professional  services  for  the  adminis-
    36  tration  and  investment  of the program. Administrative fees, costs and
    37  expenses, including investment fees and expenses, shall be paid from the
    38  assets of the fund.
    39    4. The comptroller shall provide for the administration of  the  trust
    40  fund,  including  maintaining  participant  records  and  accounts,  and
    41  providing  annual  audited  reports.  The  comptroller  may  enter  into
    42  contracts to provide administrative services and reporting.
    43    § 8. This act shall take effect April 1, 2016; provided, however, that
    44  effective  immediately,  the  addition,  amendment  and/or repeal of any
    45  rules or regulations necessary for the implementation of this act on its
    46  effective date are authorized and directed to be made and  completed  on
    47  or before such effective date.
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