84R12225 KEL-F
By: Lucio III H.B. No. 3703
A BILL TO BE ENTITLED
AN ACT
relating to the establishment of the Texas Achieving a Better Life
Experience (ABLE) Program; authorizing the imposition of fees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 54.602(b), Education Code, is amended to
read as follows:
(b) The board shall administer the prepaid higher education
tuition program established under this subchapter, [and] the higher
education savings plan established under Subchapter G, and the
Texas Achieving a Better Life Experience Program created under
Chapter 162, Human Resources Code.
SECTION 2. The heading to Section 54.634, Education Code,
is amended to read as follows:
Sec. 54.634. ESTABLISHMENT OF TRUST FUND; COLLEGE SAVINGS
PLAN ACCOUNT; TEXAS ABLE SAVINGS PLAN ACCOUNT.
SECTION 3. Section 54.634, Education Code, is amended by
adding Subsection (e) to read as follows:
(e) The Texas ABLE savings plan account is created within
the Texas tomorrow constitutional trust fund and is financed
through administrative fees and service charges as authorized by
Section 162.004, Human Resources Code.
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, 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 for the advance
payment of qualified disability expenses on behalf of a designated
beneficiary.
(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 to achieve long-term total return through a
combination of capital appreciation and current income;
(8) make appropriate payments and distributions on
behalf of designated beneficiaries under participation agreements;
(9) make refunds to participants on the cancellation
of participation agreements in accordance with the provisions,
limitations, and restrictions provided by this chapter and the
rules adopted by the board under this chapter;
(10) make provision for the payment of costs of
administering the program; and
(11) 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) 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) engage the services of private consultants,
actuaries, trustees, records administrators, managers, legal
counsel, and auditors for administrative or technical assistance;
(7) participate in any government program;
(8) impose charges and fees;
(9) contract with a person to market the program;
(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.
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.
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.
(e) Consistent with Section 529A, Internal Revenue Code,
the board shall establish the minimum period for which
contributions and earnings must be held by the ABLE program. Any
contributions or earnings that are withdrawn or distributed from an
ABLE account before the expiration of that minimum period are
subject to a penalty under Section 162.011.
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.
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.
Sec. 162.010. CANCELLATION. (a) A participant may cancel a
participation agreement at will.
(b) Each participation agreement must provide that the
agreement may be canceled on the terms and conditions and on payment
of applicable fees and costs as provided by rule.
Sec. 162.011. PENALTIES. The board shall impose a penalty
equal to or greater than 10 percent of the earnings of an ABLE
account for any distribution that is not:
(1) used exclusively for qualified disability
expenses of a designated beneficiary;
(2) made because of death of a designated beneficiary;
or
(3) held in the fund for the minimum period
established by the board.
SECTION 5. This Act takes effect December 1, 2015.