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SECTION 4. Title 11, Human
Resources Code, is amended by adding Chapter 162 to read as follows:
CHAPTER 162. TEXAS
ACHIEVING A BETTER
LIFE EXPERIENCE (ABLE) PROGRAM
Sec. 162.001. PURPOSES OF
PROGRAM. The purposes of this chapter are as follows:
(1) to encourage and
assist individuals and families in saving private
funds for the purpose of supporting individuals with disabilities to
maintain health, independence, and quality of life; and
(2) to provide secure
funding for qualified disability expenses on behalf of designated
beneficiaries with disabilities that will supplement, but not supplant,
benefits provided through private insurance, the Medicaid program under
Title XIX of the Social Security Act, the supplemental security income
program under Title XVI of the Social Security Act, the beneficiary's
employment, and other sources.
Sec. 162.002.
DEFINITIONS. In this chapter:
(1) "ABLE
account" has the meaning assigned by Section 529A, Internal Revenue
Code.
(2) "ABLE
program" or "program" means the Texas Achieving a Better
Life Experience Program created under this chapter.
(3) "Benefits" means the payment of qualified disability
expenses on behalf of a designated beneficiary from an ABLE account.
(4) "Board"
means the Prepaid Higher Education Tuition Board established under Section
54.602, Education Code.
(5) "Designated
beneficiary" and "eligible individual" have the meanings assigned by Section 529A,
Internal Revenue Code.
(6) "Financial
institution" means a bank, trust company, an insurance company, or a
registered investment company.
(7) "Internal
Revenue Code" means the Internal Revenue Code of 1986.
(8)
"Participant" means a person
who has entered into a participation agreement under this chapter.
(9) "Participation
agreement" means an agreement between a participant and the board
under this chapter that conforms to the requirements prescribed by this chapter.
(10) "Qualified disability
expenses" has the meaning assigned by
Section 529A, Internal Revenue Code.
(11) "Texas ABLE
savings plan account" means the Texas ABLE savings plan account
created under Section 54.634(e), Education Code.
Sec. 162.003. CREATION;
ADMINISTRATION.
(a) The Texas Achieving a
Better Life Experience (ABLE) Program is created under this chapter.
(b) The board shall
administer the ABLE program.
Sec. 162.004. POWERS AND
DUTIES OF BOARD. (a) To establish and administer the ABLE program, the
board shall:
(1) develop and implement
the program;
(2) adopt reasonable rules and establish policies
and procedures to implement this chapter to:
(A) permit the program to
qualify as a qualified ABLE program under Section 529A, Internal Revenue
Code; and
(B) ensure the program's
compliance with all applicable laws;
(3) either directly or
through a contractual arrangement with a financial institution for
investment services, develop and implement
educational programs and related informational materials for
participants and their families, including
special programs and materials to inform individuals with disabilities
regarding methods for financing the qualified disability expenses of
individuals with disabilities to enable those individuals to maintain
health, independence, and quality of life;
(4) enter into agreements
with any financial institution or any state or federal agency or entity as
required to administer the program under this chapter;
(5) enter into
participation agreements with participants;
(6) solicit and accept
any gifts, grants, legislative appropriations, and other funds from the
state, any unit of federal, state, or local government, or any other
person, firm, partnership, or corporation for
deposit to the Texas ABLE savings plan account;
(7) invest participant
funds in appropriate investment instruments;
(8) appoint members to an advisory committee who are stakeholders
from the disability community;
(9) make provision for
the payment of costs of administering the program; and
(10) procure insurance, guarantees, or other protections against
any loss in connection with the assets or activities of the program.
(b) The board has all
powers necessary or proper to carry out its duties under this chapter and
to effectuate the purposes of this chapter, including the power to:
(1) enter into contracts
and other necessary instruments;
(2) enter into agreements
or other transactions with the United States, state agencies, and other
entities as necessary;
(3) appear on its own
behalf before governmental agencies;
(4) contract for
necessary goods and services, including specifying in the contract duties
to be performed by the provider of a good or service that are a part of or
are in addition to the person's primary duties under the contract;
(5) engage the services
of private consultants, actuaries,
trustees, records administrators, managers, legal counsel, and auditors for
administrative or technical assistance;
(6) participate in any
government program;
(7) impose charges and
fees;
(8) contract with a person to market the program;
(9) make reports;
(10) purchase liability
insurance covering the board and employees and agents of the board; and
(11) establish other
policies, procedures, and eligibility criteria to implement this chapter.
No
equivalent provision.
Sec. 162.005. INVESTMENT
OF FUNDS. (a) All money paid by a participant in connection with a
participation agreement shall be:
(1) deposited into an
individual ABLE account held on behalf of that participant in the Texas
ABLE savings plan account; and
(2) promptly invested by
the board.
(b) For new contracts entered into after December 1, 2015, board
members shall study investment plans of other states and contract with or
negotiate to provide benefit options that are the same as or similar to
other states' qualified plans for the purpose of offering additional
options for participants.
(c) The board may
delegate to duly appointed investment
counselors authority to act on behalf of the board in the investment
and reinvestment of all or part of the funds and may also delegate to those
counselors the authority to act on
behalf of the board in the holding, purchasing, selling, assigning,
transferring, or disposing of any or all of the securities and investments
in which the funds in the Texas ABLE savings plan account have been
invested, as well as the proceeds from the investment of those funds. The investment counselors must be registered as
investment advisors with the United States Securities and Exchange
Commission.
(d) In exercising or
delegating its investment powers and authority, members of the board shall
exercise ordinary business care and prudence under the facts and
circumstances prevailing at the time of the action or decision. A member
of the board is not liable for any action taken or omitted with respect to
the exercise of, or delegation of, those powers and authority if the member
discharged the duties of the member's position in good faith and with the
degree of diligence, care, and skill that a prudent person acting in a like
capacity and familiar with those matters would use in the conduct of an
enterprise of a like character and with like aims.
(e) A company or firm in which a member of the board has a
substantial interest may not handle an investment transaction authorized by
the board. A member of the board may not profit directly or indirectly
from an investment transaction authorized by the board.
(f) A member of the board or an employee or agent of the ABLE
program may not receive any gain or profit from any funds or transactions
of the ABLE program. A member's, employee's, or agent's acceptance of any
gratuity or compensation for the purpose of influencing an action taken with
respect to the investment or management of the funds of the ABLE program is
grounds for removal or termination of the member, employee, or agent, as
applicable.
Sec. 162.006. TREATMENT
OF ASSETS. (a) The assets of the ABLE program shall at all times be
preserved, invested, and spent only for the purposes provided by this
chapter and in accordance with the participation agreements entered into
under this chapter.
(b) The state does not
have a property right in the assets of the ABLE program.
No
equivalent provision.
No
equivalent provision.
Sec. 162.007.
PARTICIPATION AGREEMENTS. (a) Under the ABLE program, the board may enter
into participation agreements with participants on behalf of designated
beneficiaries.
(b) A participation
agreement must:
(1) stipulate the terms and conditions of the ABLE program in
which the participant makes contributions;
(2) specify the method for calculating the return on the
contribution made by the participant;
(3) clearly and prominently disclose to participants the risk
associated with depositing funds with the board;
(4) be organized and presented in a way and with language that is
easily understandable by the general public; and
(5) clearly and prominently disclose to participants the existence
of any load charge or similar charge assessed against the ABLE accounts of
the participants for administration or services.
(c) Consistent with Section 529A, Internal Revenue Code, the board
shall establish:
(1) the maximum annual amount that a participant may contribute
with respect to a designated beneficiary; and
(2) a total contribution limit for ABLE accounts established under
the ABLE program with respect to a designated beneficiary.
(d) The board may establish other requirements that the board
considers appropriate to provide adequate safeguards to prevent
contributions on behalf of a designated beneficiary from exceeding the
amount that is necessary to provide for the qualified disability expenses
of the beneficiary.
Sec. 162.008. QUALIFIED
DISABILITY EXPENSES. Contributions to an ABLE account and the earnings on
those contributions may be used, as provided in the participation
agreement, to pay the qualified disability expenses of a designated
beneficiary.
No
equivalent provision.
No
equivalent provision.
Sec. 162.009. DESIGNATED
BENEFICIARY. (a) The participant is the designated beneficiary of the
ABLE account except as described by Subsection (b) and as otherwise permitted
by Section 529A, Internal Revenue Code.
(b) If the designated
beneficiary of the account is a minor or has a custodian or other fiduciary
appointed for the purpose of managing the minor's financial affairs, the
parent or custodian or other fiduciary of the beneficiary may serve as the
participant if that form of ownership is permitted or not prohibited by
Section 529A, Internal Revenue Code.
No
equivalent provision.
Sec. 162.010.
CANCELLATION.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
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SECTION 2. Chapter 54,
Education Code, is amended by adding Subchapter J to read as follows:
SUBCHAPTER J. TEXAS
ACHIEVING A BETTER LIFE EXPERIENCE (ABLE) PROGRAM
Sec. 54.901. PURPOSES OF
PROGRAM. The purposes of this subchapter are as follows:
(1) to encourage and
assist individuals and families in saving funds for the purpose of supporting
individuals with disabilities to maintain health, independence, and quality
of life; and
(2) to provide secure
funding for qualified disability expenses on behalf of designated
beneficiaries with disabilities that will supplement, but not supplant,
benefits provided through private insurance, the Medicaid program under
Title XIX of the Social Security Act, the supplemental security income
program under Title XVI of the Social Security Act, the beneficiary's
employment, and other sources.
Sec. 54.902.
DEFINITIONS. In this subchapter:
(1) "ABLE
account" has the meaning assigned by Section 529A, Internal Revenue
Code.
(2) "ABLE
program" or "program" means the Texas Achieving a Better
Life Experience Program created under this subchapter.
(3) "Board"
means the Prepaid Higher Education Tuition Board established under Section
54.602.
(4) "Designated
beneficiary" means a resident of this
state with a disability who is an eligible individual and named as the
designated beneficiary of an ABLE account.
(5) "Eligible
individual" means a person who has
certified to the board that the person is eligible to participate in the
ABLE program.
(6) "Financial
institution" means a bank, a trust company, a depository trust company, an insurance company, a broker-dealer, a registered investment
company or investment manager, the Texas
Safekeeping Trust Company, or another similar financial institution
authorized to transact business in this state.
(7) "Internal
Revenue Code" means the Internal Revenue Code of 1986.
(8)
"Participant" means a designated
beneficiary or the parent or custodian or other fiduciary of the
beneficiary who has entered into a participation agreement under
this subchapter.
(9) "Participation
agreement" means an agreement between a participant and the board
under this subchapter that conforms to the requirements prescribed by this subchapter.
(10) "Qualified
disability expenses" means any
expenses related to the eligible individual's blindness or disability that
are made for the benefit of an eligible individual who is the designated
beneficiary, and includes expenses for education, housing, transportation,
employment training and support, assistive technology and personal support
services, health, prevention and wellness, financial management and
administrative services, legal fees, oversight and monitoring, a funeral
and burial, and other expenses approved under federal regulations adopted
under Section 529A, Internal Revenue Code.
(11) "Texas ABLE
savings plan account" means the Texas ABLE savings plan account
created under Section 54.903.
Sec. 54.903. CREATION OF
PROGRAM AND ACCOUNT; ADMINISTRATION. (a) The Texas Achieving a Better
Life Experience (ABLE) Program is created under this subchapter. The Texas ABLE savings plan account is
established as a trust fund outside of the state treasury.
(b) The board shall
administer the ABLE program.
(c) The board, the office of the comptroller, and any manager or
other contractor that contracts with the board to provide services under
this subchapter are not covered entities for purposes of Chapter 181,
Health and Safety Code.
Sec. 54.904. POWERS AND
DUTIES OF BOARD. (a) To establish and administer the ABLE program, the
board shall:
(1) develop and implement
the program;
(2) adopt rules and
establish policies and procedures to implement this subchapter to:
(A) permit the program to
qualify as a qualified ABLE program under Section 529A, Internal Revenue
Code;
(B) make changes to the program as necessary for the participants
in the program to obtain or maintain federal income tax benefits or
treatment provided by Section 529A, Internal Revenue Code, and exemptions
under federal securities laws; and
(C) make changes to the program as necessary to ensure the
program's compliance with all other applicable laws and regulations;
(3) either directly or
through a contractual arrangement for investment or plan manager services with a financial institution or plan manager or another qualified entity,
develop and provide information for
participants and their families necessary
to establish and maintain an ABLE account;
(4) enter into agreements
with any financial institution or any state or federal agency or contractor or other entity as required to
administer the program under this subchapter;
(5) enter into
participation agreements with participants;
(6) solicit and accept
any gifts, grants, legislative appropriations, and other funds from the
state, any unit of federal, state, or local government, or any other
person, firm, partnership, or corporation;
(7) invest participant
funds in appropriate investment instruments; and
(8) make provision for
the payment of costs of administering the program.
(b) The board has all
powers necessary or proper to carry out its duties under this subchapter
and to effectuate the purposes of this subchapter, including the power to:
(1) sue and be sued;
(2) enter into contracts
and other necessary instruments;
(3) enter into agreements
or other transactions with the United States, state agencies, and other
entities as necessary;
(4) appear on its own
behalf before governmental agencies;
(5) contract for
necessary goods and services, including specifying in the contract duties
to be performed by the provider of a good or service that are a part of or
are in addition to the person's primary duties under the contract;
(6) contract with another state that administers a qualified ABLE
program as authorized by Section 529A, Internal Revenue Code, to provide
residents of this state with access to a qualified ABLE program;
(7) engage the services
of private consultants, trustees, records administrators, managers, legal
counsel, auditors, and other appropriate
parties or organizations for administrative or technical assistance;
(8) participate in any
government program;
(9) impose fees and
charges;
(10) develop marketing plans or promotional materials
or contract with a consultant to market the program;
(11) make reports;
(12) purchase liability
insurance covering the board and employees and agents of the board;
(13) make changes to the program as necessary for the participants
in the program to obtain or maintain federal income tax benefits or
treatment provided by Section 529A, Internal Revenue Code, and exemptions
under federal securities laws; and
(14) establish other
policies, procedures, and eligibility criteria to implement this subchapter.
Sec. 54.9045. COLLECTION
OF FEES. The board shall collect administrative fees and service charges
in connection with any agreement, contract, or transaction relating to the
program in amounts not exceeding the amount necessary to recover the cost
of establishing and maintaining the program.
Sec. 54.905. INVESTMENT
OF FUNDS. (a) All money paid by a participant in connection with a
participation agreement shall be:
(1) deposited into an
individual ABLE account held on behalf of that participant in the Texas
ABLE savings plan account; and
(2) promptly invested by
the board.
(b) The board at least annually shall establish and review the
asset allocation and selection of the underlying investments of the ABLE
program.
(c) The board may
delegate to duly appointed financial
institutions authority to act on behalf of the board in the
investment and reinvestment of all or part of the funds and may also
delegate to those financial institutions
the authority to act on behalf of the board in the holding, purchasing,
selling, assigning, transferring, or disposing of any or all of the
securities and investments in which the funds in the Texas ABLE savings plan
account have been invested, as well as the proceeds from the investment of
those funds.
(d) In delegating investment authority to financial institutions,
the board may authorize the pooling of funds from the ABLE accounts with
other funds administered by the board to maximize returns for
participants. If funds from the ABLE accounts are pooled with other funds
administered by the board, the board shall track, monitor, report, and
record separately all investment activity related to the ABLE accounts,
including any earnings and fees associated with each individual ABLE
account.
(e) The board may select one or more financial institutions to
serve as custodian of all or part of the program's assets.
(f) In the board's discretion, the board may contract with one or
more financial institutions to serve as plan manager and to invest the
money in ABLE accounts.
(g) A contract between the board and a financial institution to
act as plan manager under this subchapter may be for a term of up to five
years and may be renewable.
(h) In exercising or
delegating investment powers and authority, members of the board shall
exercise ordinary business care and prudence under the facts and
circumstances prevailing at the time of the action or decision. A member
of the board is not liable for any action taken or omitted with respect to
the exercise of, or delegation of, those powers and authority if the member
discharged the duties of the member's position in good faith and with the
degree of diligence, care, and skill that a prudent person acting in a like
capacity and familiar with those matters would use in the conduct of an
enterprise of a like character and with like aims.
(i) In administering this subchapter, the board is subject to the
board's ethics policy adopted under Section 54.6085.
Sec. 54.906. TREATMENT OF
ASSETS. (a) The assets of the ABLE program shall at all times be
preserved, invested, and spent only for the purposes provided by this
subchapter and in accordance with the participation agreements entered into
under this subchapter.
(b) Except as provided by Section 529A, Internal Revenue Code,
the state does not have a property right in the assets of the ABLE program.
Sec. 54.9065. EXCLUSION
OF ABLE ACCOUNT ASSETS FROM CERTAIN BENEFIT ELIGIBILITY DETERMINATIONS.
Notwithstanding any other provision of state law that requires
consideration of the financial circumstances of an applicant for assistance
or a benefit provided under that law, the agency making the determination
of eligibility for the assistance or benefit may not consider the amount in
the applicant's ABLE account, including earnings on that amount, and any
distribution for qualified disability expenses in determining the
applicant's eligibility to receive and the amount of the assistance or
benefit with respect to the period during which the individual maintains
the ABLE account.
Sec. 54.907. EXEMPTION
FROM SECURITIES LAWS. An ABLE account is not a security within the meaning
of the term as defined by Section 4, The Securities Act (Article 581-4,
Vernon's Texas Civil Statutes), and is exempt from the provisions of The
Securities Act (Article 581-1 et seq., Vernon's Texas Civil Statutes).
Sec. 54.908.
PARTICIPATION AGREEMENTS. (a) Under the ABLE program, the board may enter
into participation agreements with participants on behalf of designated
beneficiaries.
(b) A participation
agreement may include the following terms:
(1) the requirements and applicable restrictions for:
(A) opening an ABLE account;
(B) making contributions to an ABLE account; and
(C) directly or indirectly, directing the investment of the
contributions or balance of the ABLE account;
(2) the eligibility requirements for a participant to enter into a
participation agreement and the rights of that participant;
(3) the administrative fee and other fees and charges applicable
to an ABLE account;
(4) the terms and conditions under which an ABLE account or
participation agreement may be modified, transferred, or terminated;
(5) the method of disposition of abandoned ABLE accounts; and
(6) any other terms and conditions the board considers necessary
or appropriate, including those necessary to conform the ABLE account to
the requirements of Section 529A, Internal Revenue Code, or other
applicable federal law.
(c) The participation agreement may be amended throughout the term
of the agreement, including to allow a participant to increase or decrease
the level of participation and to change the designated beneficiary or
other matters authorized by this section and Section 529A, Internal Revenue
Code.
(d) If the board finds a participant has made a material
misrepresentation in the application for a participation agreement or in
any communication regarding the ABLE program, the board may liquidate the
participant's ABLE account. If the board liquidates an ABLE account under
this subsection, the participant is entitled to a refund, subject to any
charges or fees provided by the participation agreement and the Internal
Revenue Code.
No
equivalent provision.
Sec. 54.9085. ENCUMBRANCE
OR TRANSFER OF ACCOUNT PROHIBITED. (a) An ABLE account may not be assigned
for the benefit of creditors, used as security or collateral for any loan,
or otherwise subject to alienation, sale, transfer, assignment, pledge,
encumbrance, or charge.
(b) Notwithstanding
Subsection (a), the state is a permissible creditor upon the death of a
designated beneficiary for the purposes set forth in Section 529A, Internal
Revenue Code.
Sec. 54.909. USE OF FUND
ASSETS. The assets of the program may only be used to:
(1) make distributions to
designated beneficiaries;
(2) pay the costs of
program administration and operations;
(3) make refunds for
cancellations, excess contributions, liquidation under Section 54.908(d),
and death, in accordance with a computation method determined by the board;
(4) roll over funds to
another ABLE account to the extent authorized by Section 529A, Internal
Revenue Code; and
(5) make distributions to
the state as authorized by Section 529A, Internal Revenue Code.
Sec. 54.910. DESIGNATED
BENEFICIARY. (a) The participant is the designated beneficiary and the owner of the ABLE account except
as described by Subsection (b) and as otherwise permitted by Section 529A,
Internal Revenue Code.
(b) If the designated
beneficiary of the account is a minor or has a custodian or other fiduciary
appointed for the purpose of managing the minor's financial affairs, the
parent or custodian or other fiduciary of the beneficiary may serve as the
participant if that form of ownership is permitted or not prohibited by
Section 529A, Internal Revenue Code.
(c) A designated beneficiary may own only one ABLE account, and
each ABLE account may have only one owner, except as otherwise permitted by
Section 529A, Internal Revenue Code.
Sec. 54.911. VERIFICATION
UNDER OATH. The board may require a participant to verify under oath:
(1) the participant's
certification as an eligible individual;
(2) the participant's
selection to change a designated beneficiary;
(3) the participant's
selection to cancel a participation agreement; and
(4) any other information
the board may require.
Sec. 54.912.
CANCELLATION.
Sec. 54.913. REPORTS.
(a) The board shall comply with the reporting requirements in Section 529A,
Internal Revenue Code.
(b) The board shall
report financial information related to the ABLE program in an annual
financial report in accordance with the comptroller's requirements and
guidelines for state agencies.
(c) The board shall
include financial information for the ABLE program in the board's annual
report posted on the board's website.
(d) The board shall
prepare any other reports required by state or federal rules and
regulations.
Sec. 54.914.
CONFIDENTIALITY OF RECORDS. (a) Except as otherwise provided by this
section, all information relating to the program is public and subject to
disclosure under Chapter 552, Government Code.
(b) Information relating
to a prospective or current participant or designated beneficiary or to a
participation agreement, including any personally identifiable information,
is confidential except that the board may disclose that information to:
(1) a participant
regarding the participant's account; or
(2) a state or federal
agency as necessary to administer the program or as required by Section
529A, Internal Revenue Code, or other federal or state requirements.
Sec. 54.915. PROGRAM
LIMITATIONS. (a) Nothing in this subchapter or in any participation
agreement entered into under this subchapter may be construed to guarantee
that amounts saved under the program will be sufficient to cover the
qualified disability expenses of a designated beneficiary.
(b) Nothing in this
subchapter or in any participation agreement entered into under this
subchapter may be construed to create any obligation of the state, any
agency or instrumentality of the state, or a plan manager to guarantee for
the benefit of a participant:
(1) the return of any
amount contributed to an account;
(2) the rate of interest
or other return on an account; or
(3) the payment of
interest or other return on an account.
(c) The board by rule
shall require that informational materials used in connection with a
contribution to an ABLE account clearly indicate that the account is not
insured by this state and that neither the principal deposited nor the
investment return is guaranteed by the state.
Sec. 54.916. TERMINATION
OR MODIFICATION OF PROGRAM. (a) If the comptroller determines that the
ABLE program is not financially feasible, the comptroller shall notify the
governor and the legislature and recommend that the board not administer an
ABLE program or that the program be modified or terminated.
(b) If the comptroller
determines that the ABLE program is not financially feasible, the board may
adjust the terms of participation agreements as necessary to ensure the
financial feasibility of the program.
(c) If the ABLE program
is terminated, the balance of each ABLE account shall be paid to the
participant, to the extent possible.
Sec. 54.917. ABLE PROGRAM
ADVISORY COMMITTEE. (a) The ABLE program advisory committee is established
to review rules and procedures related to the ABLE program, to provide
guidance, suggest changes, and make recommendations for the administration
of the program, and to provide assistance as needed to the board and
comptroller during the creation of the program.
(b) The comptroller shall
appoint the members of the advisory committee, including:
(1) persons with a
disability who qualify for the program;
(2) family members of a
person with a disability who qualifies for the program;
(3) representatives of
disability advocacy organizations; and
(4) representatives of
the financial community.
(c) The comptroller shall
appoint a presiding officer.
(d) The advisory committee
shall meet quarterly or more frequently as the presiding officer determines
is necessary to carry out the responsibilities of the committee.
(e) A member of the
advisory committee is not entitled to compensation or reimbursement for
travel expenses.
(f) Chapter 2110,
Government Code, does not apply to this section.
(g) This section expires
and the advisory committee is abolished December 1, 2019.
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