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[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 647 Reported in House (RH)]

                                                 Union Calendar No. 456
113th CONGRESS
  2d Session
                                H. R. 647

                      [Report No. 113-614, Part I]

   To amend the Internal Revenue Code of 1986 to provide for the tax 
  treatment of ABLE accounts established under State programs for the 
   care of family members with disabilities, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           February 13, 2013

 Mr. Crenshaw (for himself, Mr. Van Hollen, Mrs. McMorris Rodgers, Mr. 
 Sessions, Mr. Runyan, Mr. Mica, Ms. Tsongas, Mr. Coffman, Mr. Roe of 
    Tennessee, Mr. Cooper, Mr. Moran, Mr. Harper, Mr. Connolly, Mr. 
Sarbanes, Ms. Clarke, Mr. Larsen of Washington, Mr. Gerlach, Mr. Larson 
 of Connecticut, Mr. Carson of Indiana, Mr. Tonko, Mr. Cicilline, Mr. 
 Ryan of Ohio, Mr. Young of Florida, Mr. Holt, Mrs. Capps, Mr. Bachus, 
 Mr. McGovern, Ms. Bonamici, Mr. Matheson, Mr. Miller of Florida, Mr. 
Nunnelee, Mr. Stivers, Mr. Womack, Ms. Herrera Beutler, Mr. Johnson of 
  Ohio, Mrs. Davis of California, Mr. Courtney, Mr. King of New York, 
  Mrs. Hartzler, Mr. McKinley, Mr. Smith of New Jersey, Mr. Vela, Mr. 
Wolf, Mrs. Capito, Mr. Yarmuth, Ms. Brownley of California, Mr. Yoder, 
  Mr. Rooney, Mr. Marchant, Mrs. Brooks of Indiana, Ms. Norton, Mrs. 
 Bachmann, Mr. Honda, Mr. Meehan, Mr. Benishek, Mr. Poe of Texas, Mr. 
  Welch, Mr. Walberg, and Mr. Deutch) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addition 
      to the Committee on Energy and Commerce, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

                           November 12, 2014

  Additional sponsors: Ms. Ros-Lehtinen, Mr. Hastings of Florida, Mr. 
    Meadows, Mr. Schiff, Mr. Capuano, Ms. Duckworth, Mr. Webster of 
Florida, Mr. Keating, Mr. Barletta, Mr. Himes, Mr. Langevin, Mr. Payne, 
Mr. Diaz-Balart, Mr. Hanna, Ms. Pingree of Maine, Mr. Posey, Mr. Brady 
  of Pennsylvania, Mr. Clay, Mr. Loebsack, Mr. Markey, Mrs. Roby, Ms. 
   DeLauro, Mr. Price of North Carolina, Mr. Michaud, Mr. Cohen, Mr. 
 Lipinski, Mr. Kennedy, Ms. Brown of Florida, Mr. Castro of Texas, Ms. 
 Eddie Bernice Johnson of Texas, Mr. Messer, Mr. Wenstrup, Mr. Carney, 
  Mr. McCaul, Mr. Pearce, Mr. Gallego, Mr. Cardenas, Mr. Bucshon, Mr. 
Yoho, Ms. Lofgren, Mrs. McCarthy of New York, Mr. Massie, Mr. Al Green 
of Texas, Mr. Barber, Mr. Chabot, Mr. Pocan, Mr. Gardner, Mr. Tierney, 
   Mr. O'Rourke, Mr. Culberson, Ms. Castor of Florida, Mr. Graves of 
 Missouri, Mr. Veasey, Mr. Hall, Ms. Wasserman Schultz, Mr. Crawford, 
   Mr. Delaney, Mrs. Blackburn, Mr. Young of Alaska, Mr. Turner, Mr. 
     Richmond, Mr. Lynch, Mr. Cole, Mr. Lowenthal, Mr. Thompson of 
  California, Mr. Goodlatte, Mr. Wilson of South Carolina, Mr. Kline, 
Mrs. Noem, Mr. Andrews, Mr. Fitzpatrick, Mr. Stutzman, Mr. Fincher, Mr. 
Bentivolio, Ms. Moore, Ms. Schakowsky, Mr. Ruppersberger, Mr. Hultgren, 
 Ms. Esty, Mr. Butterfield, Mr. Latta, Mr. Calvert, Mr. Cummings, Mr. 
 Rahall, Mr. Gibson, Mr. Rogers of Alabama, Ms. Kuster, Mr. Braley of 
    Iowa, Mr. Luetkemeyer, Ms. DelBene, Mr. Peters of Michigan, Mr. 
   Perlmutter, Mr. Duffy, Mr. Murphy of Pennsylvania, Ms. Frankel of 
 Florida, Mr. Schneider, Mr. Cotton, Mr. Rogers of Kentucky, Ms. Shea-
 Porter, Mr. Ribble, Mrs. Lowey, Mr. Gibbs, Ms. McCollum, Mr. Pallone, 
Mr. Ben Ray Lujan of New Mexico, Mr. Paulsen, Mrs. Beatty, Mr. Bonner, 
Mr. Sires, Mr. Rodney Davis of Illinois, Mr. Huizenga of Michigan, Mr. 
  Cuellar, Mr. Salmon, Ms. Edwards, Mr. Cassidy, Mr. Southerland, Mr. 
Walz, Mr. Nadler, Mr. Doyle, Mr. Blumenauer, Mrs. Carolyn B. Maloney of 
 New York, Ms. Speier, Mr. Doggett, Ms. Michelle Lujan Grisham of New 
 Mexico, Mr. Schock, Ms. Roybal-Allard, Mr. Bilirakis, Mr. Latham, Mr. 
   Wittman, Mr. DeFazio, Mr. Griffin of Arkansas, Mrs. Ellmers, Mr. 
  Rothfus, Mr. Sensenbrenner, Ms. Waters, Ms. Kaptur, Mr. Thompson of 
   Pennsylvania, Mr. Jones, Mr. Lance, Mr. McIntyre, Mr. Forbes, Mr. 
 Owens, Mr. Amodei, Mr. Barr, Ms. Titus, Mr. Palazzo, Mr. Griffith of 
  Virginia, Mr. Schweikert, Ms. Wilson of Florida, Mr. David Scott of 
 Georgia, Mr. Rokita, Mr. Nugent, Mr. Polis, Mr. Ross, Mr. Rigell, Mr. 
  Walden, Mr. Dent, Mr. Grayson, Mr. LaMalfa, Mr. Bishop of Utah, Mr. 
  Buchanan, Mr. Bishop of Georgia, Mrs. Kirkpatrick, Mr. Carter, Ms. 
Sewell of Alabama, Mr. Whitfield, Mr. Smith of Texas, Mr. Holding, Mr. 
Fortenberry, Mr. Neugebauer, Mr. Simpson, Mr. Terry, Mr. DeSantis, Mr. 
  Radel, Mr. Pittenger, Mr. Farenthold, Mr. Pascrell, Mrs. Miller of 
 Michigan, Mr. Johnson of Georgia, Ms. Fudge, Mr. McDermott, Mr. Neal, 
    Ms. Granger, Mr. Bishop of New York, Mr. Franks of Arizona, Mr. 
Cleaver, Mr. Meeks, Mr. Lewis, Mr. Joyce, Mr. Coble, Mr. Visclosky, Mr. 
Horsford, Mr. Farr, Mr. Vargas, Ms. Lee of California, Mr. Cramer, Mr. 
     Kinzinger of Illinois, Mr. Peterson, Ms. Eshoo, Mr. Peters of 
California, Mr. Nunes, Mr. Maffei, Mr. Bera of California, Mr. Huffman, 
   Ms. Linda T. Sanchez of California, Ms. Sinema, Mr. Rice of South 
 Carolina, Mr. Ellison, Mr. Murphy of Florida, Mr. Cook, Mr. Jeffries, 
 Ms. Hahn, Mr. Nolan, Mr. Takano, Mr. Ruiz, Mr. Schrader, Mr. Guthrie, 
Mr. Hudson, Mr. Long, Mr. Tipton, Mr. Engel, Ms. Bass, Mr. Garcia, Mr. 
 Enyart, Mr. Sherman, Mr. Serrano, Mr. Olson, Mr. Jordan, Mr. Heck of 
 Nevada, Mrs. Walorski, Mr. Broun of Georgia, Mr. Gingrey of Georgia, 
  Mr. Royce, Mr. McHenry, Mr. Conaway, Mr. Conyers, Mrs. Wagner, Mr. 
    Fleming, Mr. Grimm, Mr. Stockman, Mr. Israel, Mr. LoBiondo, Mr. 
  Hinojosa, Mr. Mulvaney, Mr. Austin Scott of Georgia, Mr. Collins of 
Georgia, Ms. Jackson Lee, Mr. Daines, Mrs. Napolitano, Mr. Burgess, Mr. 
  Thornberry, Mr. Shimkus, Mr. Gene Green of Texas, Mr. McNerney, Mr. 
 Garamendi, Mr. Hurt, Mr. Heck of Washington, Mr. Cartwright, Ms. Chu, 
 Mr. Kildee, Mr. Westmoreland, Mr. Kilmer, Mrs. Bustos, Mr. Kind, Mrs. 
  Negrete McLeod, Ms. Loretta Sanchez of California, Mr. Pompeo, Mr. 
    Marino, Ms. Matsui, Ms. Schwartz, Mr. Crowley, Mr. Swalwell of 
    California, Ms. Meng, Mr. Sean Patrick Maloney of New York, Ms. 
  Velazquez, Mr. Valadao, Mr. Costa, Mr. Hastings of Washington, Ms. 
 Clark of Massachusetts, Mr. Rush, Ms. Jenkins, Mr. Danny K. Davis of 
  Illinois, Mr. McAllister, Mr. Roskam, Mr. Higgins, Mr. Scalise, Mr. 
Gutierrez, Mr. Byrne, Mr. Sam Johnson of Texas, Mr. Quigley, Mr. Kelly 
 of Pennsylvania, Mr. Reichert, Mrs. Black, Mr. Young of Indiana, Mr. 
 Pierluisi, Mr. Hunter, Mr. DesJarlais, Mr. Tiberi, Mr. Frelinghuysen, 
Ms. Gabbard, Mr. Hensarling, Ms. Slaughter, Mr. Renacci, Mr. Gosar, Mr. 
 Rangel, Mr. Flores, Mr. Fattah, Mr. Harris, Mr. Duncan of Tennessee, 
   Mr. Upton, Mr. Sablan, Mr. McKeon, Mr. Williams, Mr. Denham, Mr. 
Fleischmann, Mr. Brady of Texas, Mr. Price of Georgia, Mr. McClintock, 
           Mr. Barton, Mr. Reed, Mr. Jolly, and Mr. Boustany

                           November 12, 2014

    Reported from the Committee on Ways and Means with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                           November 12, 2014

   The Committee on Energy and Commerce discharged; committed to the 
 Committee of the Whole House on the State of the Union and ordered to 
                               be printed
    [For text of introduced bill, see copy of bill as introduced on 
                           February 13, 2013]

_______________________________________________________________________

                                 A BILL

 
   To amend the Internal Revenue Code of 1986 to provide for the tax 
  treatment of ABLE accounts established under State programs for the 
   care of family members with disabilities, and for other purposes.

 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Achieving a Better Life Experience 
Act of 2014'' or the ``ABLE Act of 2014''.

SEC. 2. PURPOSES.

    The purposes of this Act 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.
            (2) To provide secure funding for disability-related 
        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 such Act, the beneficiary's 
        employment, and other sources.

SEC. 3. QUALIFIED ABLE PROGRAMS.

    (a) In General.--Subchapter F of chapter 1 of the Internal Revenue 
Code of 1986 is amended by inserting after section 529 the following 
new section:

``SEC. 529A. QUALIFIED ABLE PROGRAMS.

    ``(a) General Rule.--A qualified ABLE program shall be exempt from 
taxation under this subtitle. Notwithstanding the preceding sentence, 
such program shall be subject to the taxes imposed by section 511 
(relating to imposition of tax on unrelated business income of 
charitable organizations).
    ``(b) Qualified ABLE Program.--For purposes of this section--
            ``(1) In general.--The term `qualified ABLE program' means 
        a program established and maintained by a State, or agency or 
        instrumentality thereof--
                    ``(A) under which a person may make contributions 
                for a taxable year, for the benefit of an individual 
                who is an eligible individual for such taxable year, to 
                an ABLE account which is established for the purpose of 
                meeting the qualified disability expenses of the 
                designated beneficiary of the account,
                    ``(B) which limits a designated beneficiary to 1 
                ABLE account for purposes of this section,
                    ``(C) which allows for the establishment of an ABLE 
                account only for a beneficiary who is a resident of 
                such State or a resident of a contracting State, and
                    ``(D) which meets the other requirements of this 
                section.
            ``(2) Cash contributions.--A program shall not be treated 
        as a qualified ABLE program unless it provides that no 
        contribution will be accepted--
                    ``(A) unless it is in cash, or
                    ``(B) except in the case of contributions under 
                subsection (c)(1)(C), if such contribution to an ABLE 
                account would result in aggregate contributions from 
                all contributors to the ABLE account for the taxable 
                year exceeding the amount in effect under section 
                2503(b) for the calendar year in which the taxable year 
                begins.
        For purposes of this paragraph, rules similar to the rules of 
        section 408(d)(4) (determined without regard to subparagraph 
        (B) thereof) shall apply.
            ``(3) Separate accounting.--A program shall not be treated 
        as a qualified ABLE program unless it provides separate 
        accounting for each designated beneficiary.
            ``(4) No investment direction.--A program shall not be 
        treated as a qualified ABLE program unless it provides that any 
        contributor to, or designated beneficiary under, such program 
        may not directly or indirectly direct the investment of any 
        contributions to the program (or any earnings thereon).
            ``(5) No pledging of interest as security.--A program shall 
        not be treated as a qualified ABLE program if it allows any 
        interest in the program or any portion thereof to be used as 
        security for a loan.
            ``(6) Prohibition on excess contributions.--A program shall 
        not be treated as a qualified ABLE program unless it provides 
        adequate safeguards to prevent aggregate contributions on 
        behalf of a designated beneficiary in excess of the limit 
        established by the State under section 529(b)(6). For purposes 
        of the preceding sentence, aggregate contributions include 
        contributions under any prior qualified ABLE program of any 
        State or agency or instrumentality thereof.
    ``(c) Tax Treatment.--
            ``(1) Distributions.--
                    ``(A) In general.--Any distribution under a 
                qualified ABLE program shall be includible in the gross 
                income of the distributee in the manner as provided 
                under section 72 to the extent not excluded from gross 
                income under any other provision of this chapter.
                    ``(B) Distributions for qualified disability 
                expenses.--For purposes of this paragraph, if 
                distributions from a qualified ABLE program--
                            ``(i) do not exceed the qualified 
                        disability expenses of the designated 
                        beneficiary, no amount shall be includible in 
                        gross income, and
                            ``(ii) in any other case, the amount 
                        otherwise includible in gross income shall be 
                        reduced by an amount which bears the same ratio 
                        to such amount as such expenses bear to such 
                        distributions.
                    ``(C) Change in beneficiaries or programs.--
                            ``(i) Rollovers from able accounts.--
                        Subparagraph (A) shall not apply to any amount 
                        paid or distributed from an ABLE account to the 
                        extent that the amount received is paid, not 
                        later than the 60th day after the date of such 
                        payment or distribution, into another ABLE 
                        account for the benefit of the same beneficiary 
                        or an eligible individual who is a family 
                        member of the beneficiary.
                            ``(ii) Change in designated 
                        beneficiaries.--Any change in the designated 
                        beneficiary of an interest in a qualified ABLE 
                        program during a taxable year shall not be 
                        treated as a distribution for purposes of 
                        subparagraph (A) if the new beneficiary is an 
                        eligible individual for such taxable year and a 
                        member of the family of the former beneficiary.
                            ``(iii) Limitation on certain rollovers.--
                        Clause (i) shall not apply to any transfer if 
                        such transfer occurs within 12 months from the 
                        date of a previous transfer to any qualified 
                        ABLE program for the benefit of the designated 
                        beneficiary.
                    ``(D) Operating rules.--For purposes of applying 
                section 72--
                            ``(i) except to the extent provided by the 
                        Secretary, all distributions during a taxable 
                        year shall be treated as one distribution, and
                            ``(ii) except to the extent provided by the 
                        Secretary, the value of the contract, income on 
                        the contract, and investment in the contract 
                        shall be computed as of the close of the 
                        calendar year in which the taxable year begins.
            ``(2) Gift tax rules.--For purposes of chapters 12 and 13--
                    ``(A) Contributions.--Any contribution to a 
                qualified ABLE program on behalf of any designated 
                beneficiary--
                            ``(i) shall be treated as a completed gift 
                        to such beneficiary which is not a future 
                        interest in property, and
                            ``(ii) shall not be treated as a qualified 
                        transfer under section 2503(e).
                    ``(B) Treatment of distributions.--Except as 
                provided in subparagraph (C), in no event shall a 
                distribution from a qualified ABLE program be treated 
                as a taxable gift.
                    ``(C) Treatment of designation of new 
                beneficiary.--The taxes imposed by chapters 12 and 13 
                shall apply to a transfer by reason of a change in the 
                designated beneficiary under the program (or a 
                contribution under paragraph (1)(C) to the ABLE account 
                of a new beneficiary) during any taxable year unless, 
                as of the beginning of such taxable year, the new 
                beneficiary is both an eligible individual for such 
                taxable year and a member of the family of the former 
                beneficiary.
            ``(3) Additional tax for distributions not used for 
        disability expenses.--
                    ``(A) In general.--The tax imposed by this chapter 
                for any taxable year on any taxpayer who receives a 
                distribution from a qualified ABLE program which is 
                includible in gross income shall be increased by 10 
                percent of the amount which is so includible.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                if the payment or distribution is made to a beneficiary 
                (or to the estate of the designated beneficiary) on or 
                after the death of the designated beneficiary.
                    ``(C) Contributions returned before certain date.--
                Subparagraph (A) shall not apply to the distribution of 
                any contribution made during a taxable year on behalf 
                of the designated beneficiary if--
                            ``(i) such distribution is received on or 
                        before the day prescribed by law (including 
                        extensions of time) for filing such designated 
                        beneficiary's return for such taxable year, and
                            ``(ii) such distribution is accompanied by 
                        the amount of net income attributable to such 
                        excess contribution.
                Any net income described in clause (ii) shall be 
                included in gross income for the taxable year in which 
                such excess contribution was made.
            ``(4) Loss of able account treatment.--If, during any 
        taxable year of an eligible individual for whose benefit any 
        ABLE account is established, more than 1 ABLE account for the 
        benefit of the eligible individual exists at the same time, 
        each such ABLE account other than the earliest established ABLE 
        account shall not be treated as an ABLE account as of the first 
        day of such taxable year.
    ``(d) Reports.--
            ``(1) In general.--Each officer or employee having control 
        of the qualified ABLE program or their designee shall make such 
        reports regarding such program to the Secretary and to 
        designated beneficiaries with respect to contributions, 
        distributions, the return of excess contributions, and such 
        other matters as the Secretary may require.
            ``(2) Certain aggregated information.--For research 
        purposes, the Secretary shall make available to the public 
        reports containing aggregate information, by diagnosis and 
        other relevant characteristics, on contributions and 
        distributions from the qualified ABLE program. In carrying out 
        the preceding sentence an item may not be made available to the 
        public if such item can be associated with, or otherwise 
        identify, directly or indirectly, a particular individual.
            ``(3) Notice of establishment of able account.--The trustee 
        of an ABLE account shall submit a notice to the Secretary upon 
        the establishment of the ABLE account. Such notice shall 
        contain the name and State of residence of the beneficiary and 
        such other information as the Secretary may require.
            ``(4) Electronic distribution statements.--For purposes of 
        section 4 of the Achieving a Better Life Experience Act of 
        2014, States shall submit electronically on a monthly basis to 
        the Commissioner of Social Security, in the manner specified by 
        the Commissioner, statements on relevant distributions and 
        account balances from all ABLE accounts.
            ``(5) Requirements.--The reports and notices required by 
        paragraphs (1), (2), and (3) shall be filed at such time and in 
        such manner and furnished to such individuals at such time and 
        in such manner as may be required by the Secretary.
    ``(e) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Eligible individual.--
                    ``(A) In general.--An individual is an eligible 
                individual for a taxable year if during such taxable 
                year--
                            ``(i) a disability certification with 
                        respect to such individual is filed with the 
                        Secretary for such taxable year, or
                            ``(ii) the individual has been determined 
                        for purposes of section 223 or 1614 of the 
                        Social Security Act (42 U.S.C. 421, 1382c) to 
                        meet the criteria of subparagraph (B) for such 
                        taxable year.
                    ``(B) Criteria.--An individual meets the criteria 
                of this subparagraph for a taxable year if--
                            ``(i) in the case of an individual who has 
                        not attained age 19 as of the close of the 
                        taxable year, the individual is either blind 
                        (within the meaning of section 1614(a)(2) of 
                        the Social Security Act (42 U.S.C. 
                        1382c(a)(2))) or disabled within the meaning of 
                        section 1614(a)(3)(C) of such Act (42 U.S.C. 
                        1382c(a)(3)(C)), or
                            ``(ii) the individual--
                                    ``(I) is either blind (within the 
                                meaning of section 1614(a)(2) of such 
                                Act (42 U.S.C. 1382c(a)(2))) or 
                                disabled within the meaning of section 
                                1614(a)(3)(A) of such Act, and
                                    ``(II) such blindness or disability 
                                occurred before the date on which the 
                                individual attained age 26.
            ``(2) Disability certification.--
                    ``(A) In general.--The term `disability 
                certification' means, with respect to an eligible 
                individual, a certification to the satisfaction of the 
                Secretary by the eligible individual or the parent or 
                guardian of the eligible individual that--
                            ``(i) the individual meets the criteria 
                        described in paragraph (1)(B), and
                            ``(ii) includes a copy of the individual's 
                        diagnosis relating to the individual's relevant 
                        impairment or impairments, signed by a 
                        physician meeting the criteria of section 
                        1861(r)(1) of the Social Security Act.
                    ``(B) Restriction on use of certification.--No 
                inference may be drawn from a disability certification 
                for purposes of establishing eligibility for benefits 
                under title II, XVI, or XIX of the Social Security Act.
            ``(3) Designated beneficiary.--The term `designated 
        beneficiary' in connection with an ABLE account established 
        under a qualified ABLE program means--
                    ``(A) the eligible individual designated at the 
                commencement of participation in the qualified ABLE 
                program as the beneficiary of amounts paid (or to be 
                paid) to the program, and
                    ``(B) in the case of a change in beneficiaries 
                described in subparagraph (C)(ii) of subsection (c)(1), 
                the individual who is the new beneficiary.
            ``(4) Member of family.--The term `member of the family' 
        means, with respect to any designated beneficiary, an 
        individual who bears a relationship to such beneficiary which 
        is described in subparagraph section 152(d)(2)(B). For purposes 
        of the preceding sentence, a rule similar to the rule of 
        section 152(f)(1)(B) shall apply.
            ``(5) Qualified disability expenses.--The term `qualified 
        disability expenses' means any expenses related to the eligible 
        individual's blindness or disability which are made for the 
        benefit of an eligible individual who is the designated 
        beneficiary, including the following expenses: education, 
        housing, transportation, employment training and support, 
        assistive technology and personal support services, health, 
        prevention and wellness, financial management and 
        administrative services, legal fees, expenses for oversight and 
        monitoring, funeral and burial expenses, and other expenses, 
        which are approved by the Secretary under regulations and 
        consistent with the purposes of this section.
            ``(6) ABLE account.--The term `ABLE account' means an 
        account established and maintained under a qualified ABLE 
        program.
            ``(7) Contracting state.--The term `contracting State' 
        means a State without a qualified ABLE program which has 
        entered into a contract with a State with a qualified ABLE 
        program to provide residents of the contracting State access to 
        a qualified ABLE program.
    ``(f) Transfer to State.--Subject to any outstanding payments due 
for qualified disability expenses, in the case that the designated 
beneficiary dies, all amounts remaining in the qualified ABLE account 
not in excess of the amount equal to the total medical assistance paid 
for the designated beneficiary after the establishment of the account, 
net of any premiums paid from the account or paid by or on behalf of 
the beneficiary to a Medicaid Buy-In program, under any State Medicaid 
plan established under title XIX of the Social Security Act shall be 
distributed to such State upon filing of a claim for payment by such 
State. For purposes of this paragraph, the State shall be a creditor of 
an ABLE account and not a beneficiary. Subsection (c)(3) shall not 
apply to a distribution under the preceding sentence.
    ``(g) Regulations.--The Secretary shall prescribe such regulations 
or other guidance as the Secretary determines necessary or appropriate 
to carry out the purposes of this section, including regulations--
            ``(1) to enforce the 1 ABLE account per eligible individual 
        limit,
            ``(2) providing for the information required to be 
        presented to open an ABLE account,
            ``(3) to generally define qualified disability expenses,
            ``(4) developed in consultation with the Commissioner of 
        Social Security, relating to disability certifications and 
        determinations of disability, including those conditions deemed 
        to meet the requirements of subsection (e)(1)(B)(ii),
            ``(5) to prevent fraud and abuse with respect to amounts 
        claimed as qualified disability expenses,
            ``(6) under chapters 11, 12, and 13 of this title, and
            ``(7) to allow for transfers from one ABLE account to 
        another ABLE account in cases in which there is a change in the 
        State of residence of an eligible individual.''.
    (b) Tax on Excess Contributions.--
            (1) In general.--Subsection (a) of section 4973 of the 
        Internal Revenue Code of 1986 (relating to tax on excess 
        contributions to certain tax-favored accounts and annuities) is 
        amended by striking ``or'' at the end of paragraph (4), by 
        inserting ``or'' at the end of paragraph (5), and by inserting 
        after paragraph (5) the following new paragraph:
            ``(6) an ABLE account (within the meaning of section 
        529A),''.
            (2) Excess contribution.--Section 4973 of the Internal 
        Revenue Code of 1986 is amended by adding at the end the 
        following new subsection:
    ``(h) Excess Contributions to ABLE Account.--For purposes of this 
section--
            ``(1) In general.--In the case of an ABLE account (within 
        the meaning of section 529A), the term `excess contributions' 
        means the amount by which the amount contributed for the 
        taxable year to such account (other than contributions under 
        section 529A(c)(1)(C)) exceeds the contribution limit under 
        section 529A(b)(2)(B).
            ``(2) Special rule.--For purposes of this subsection, any 
        contribution which is distributed out of the ABLE account in a 
        distribution to which the last sentence of section 529A(b)(2) 
        applies shall be treated as an amount not contributed.''.
    (c) Penalty for Failure to File Reports.--Section 6693(a)(2) of the 
Internal Revenue Code of 1986 is amended by striking ``and'' at the end 
of subparagraph (D), by redesignating subparagraph (E) as subparagraph 
(F), and by inserting after subparagraph (D) the following:
                    ``(E) section 529A(d) (relating to qualified ABLE 
                programs), and''.
    (d) Conforming Amendments.--
            (1) Section 26(b)(2) of the Internal Revenue Code of 1986 
        is amended by striking ``and'' at the end of subparagraph (W), 
        by striking the period at the end of subparagraph (X) and 
        inserting ``, and'', and by inserting after subparagraph (X) 
        the following:
                    ``(Y) section 529A(c)(3)(A) (relating to additional 
                tax on ABLE account distributions not used for 
                qualified disability expenses).''.
            (2) The heading for part VIII of subchapter F of chapter 1 
        of the Internal Revenue Code of 1986 is amended by striking 
        ``higher education'' and inserting ``certain''.
            (3) The item in the table of parts for subchapter F of 
        chapter 1 of the Internal Revenue Code of 1986 relating to part 
        VIII is amended to read as follows:

               ``Part VIII. Certain Savings Entities.''.

            (4) The table of sections for part VIII of subchapter F of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        inserting after the item relating to section 529 the following 
        new item:

``Sec. 529A. Qualified ABLE programs.''.
    (e) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years beginning after December 31, 2014.
            (2) Regulations.--The Secretary of the Treasury (or the 
        Secretary's designee) shall promulgate the regulations or other 
        guidance required under section 529A(g) of the Internal Revenue 
        Code of 1986, as added by subsection (a), not later than 6 
        months after the date of the enactment of this Act.

SEC. 4. TREATMENT OF ABLE ACCOUNTS UNDER CERTAIN FEDERAL PROGRAMS.

    (a) Account Funds Disregarded for Purposes of Certain Other Means-
Tested Federal Programs.--Notwithstanding any other provision of 
Federal law that requires consideration of 1 or more financial 
circumstances of an individual, for the purpose of determining 
eligibility to receive, or the amount of, any assistance or benefit 
authorized by such provision to be provided to or for the benefit of 
such individual, any amount (including earnings thereon) in the ABLE 
account (within the meaning of section 529A of the Internal Revenue 
Code of 1986) of such individual, and any distribution for qualified 
disability expenses (as defined in subsection (e)(5) of such section) 
shall be disregarded for such purpose with respect to any period during 
which such individual maintains, makes contributions to, or receives 
distributions from such ABLE account, except that, in the case of the 
supplemental security income program under title XVI of the Social 
Security Act, a distribution for housing expenses (within the meaning 
of such subsection) shall not be so disregarded, and in the case of 
such program, only the 1st $100,000 of the amount (including such 
earnings) in such ABLE account shall be so disregarded.
    (b) Suspension of SSI Benefits During Periods of Excessive Account 
Funds.--
            (1) In general.--The benefits of an individual under the 
        supplemental security income program under title XVI of the 
        Social Security Act shall not be terminated, but shall be 
        suspended, by reason of excess resources of the individual 
        attributable to an amount in the ABLE account (within the 
        meaning of section 529A of the Internal Revenue Code of 1986) 
        of the individual not disregarded under subsection (a) of this 
        section.
            (2) No impact on medicaid eligibility.--An individual who 
        would be receiving payment of such supplemental security income 
        benefits but for the application of the previous sentence shall 
        be treated for purposes of title XIX of the Social Security Act 
        as if the individual continued to be receiving payment of such 
        benefits.
    (c) Effective Date.--This section shall take effect on the date of 
the enactment of this Act.
                                                 Union Calendar No. 456

113th CONGRESS

  2d Session

                               H. R. 647

                      [Report No. 113-614, Part I]

_______________________________________________________________________

                                 A BILL

   To amend the Internal Revenue Code of 1986 to provide for the tax 
  treatment of ABLE accounts established under State programs for the 
   care of family members with disabilities, and for other purposes.

_______________________________________________________________________

                           November 12, 2014

    Reported from the Committee on Ways and Means with an amendment

                           November 12, 2014

   The Committee on Energy and Commerce discharged; committed to the 
 Committee of the Whole House on the State of the Union and ordered to 
                               be printed
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