S.Amdt. 4771

SA 4771. Mr. CASEY submitted an amendment intended to be proposed to
amendment SA 4753 proposed by Mr. Reid (for himself and Mr. McConnell)
to the bill H.R. 4853, to amend the Internal Revenue Code of 1986 to
extend the funding and expenditure authority of the Airport and Airway
Trust Fund, to amend title 49, United States Code, to extend
authorizations for the airport improvement program, and for other
purposes; which was ordered to lie on the table; as follows:

On page 74, after line 6, insert the following:

TITLE IX--ABLE ACT

SEC. 901. SHORT TITLE.

This title may be cited as the ``Achieving a Better Life
Experience Act of 2010'' or the ``ABLE Act of 2010''.

SEC. 902. 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. 903. ABLE ACCOUNTS.

(a) Establishment.--
(1) In general.--Subchapter F of chapter 1 is amended by
inserting after part VIII the following new part:

``PART IX--SAVINGS FOR INDIVIDUALS WITH DISABILITIES

``Sec. 530A. ABLE Accounts.

``SEC. 530A. ABLE ACCOUNTS.

``(a) General Rule.--An ABLE account shall be exempt from
taxation under this subtitle. Notwithstanding the preceding
sentence, such account shall be subject to the taxes imposed
by section 511 (relating to imposition of tax on unrelated
business income of charitable organizations).
``(b) Definitions and Special Rules.--For purposes of this
section--
``(1) ABLE accounts.--The term `ABLE account' means a trust
created or organized in the United States (and designated as
an ABLE account at the time created or organized) exclusively
for the purpose of paying or reimbursing qualified disability
expenses of an individual who is an individual with a
disability and who is the designated beneficiary of the
trust, but only if the written governing instrument creating
the trust meets the following requirements:
``(A) No contribution will be accepted--
``(i) except in the case of rollover contributions
described in subsection (c)(4) and sections 223(f)(5),
408(d)(3), 529(c)(3)(C)(i), and 530(d)(5), unless it is in
cash or the equivalent thereof,
``(ii) if such contribution would result in aggregate
contributions to all ABLE accounts for the same designated
beneficiary for the taxable year and all preceding taxable
years exceeding $500,000 plus the yearly inflation
adjustment, and
``(iii) after the date on which the designated beneficiary
attains the age of 65.
``(B) The trustee is--
``(i) a bank (as defined in section 408(n)),
``(ii) the designated beneficiary,
``(iii) a parent or guardian of the account holder, or
``(iv) a third-party appointed by the designated
beneficiary or a parent or guardian of the designated
beneficiary (including a family member of the designated
beneficiary or an organization that administers pooled and
special needs trusts) who demonstrates to the satisfaction of
the Secretary that the manner in which that person will
administer the trust will be consistent with the requirements
of this section.
``(C) No part of the trust assets will be invested in life
insurance contracts.
``(D) The assets of the trust shall not be commingled with
other property except in a common trust fund or common
investment fund.
``(E) Except as provided in paragraph (4) or (5) of
subsection (c) and for qualified disability expenses that are
funeral and burial expenses, in the case that the designated
beneficiary dies or ceases to be an individual with a
disability, all amounts remaining in the trust not in excess
of the amount equal to the total medical assistance paid for
the designated beneficiary after the establishment of the
trust, 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 within 90
days of the date of notification that the individual is
deceased. For purposes of this subparagraph, the State shall
be a creditor of an ABLE account and not a beneficiary.
``(2) Qualified disability expenses.--
``(A) In general.--The term `qualified disability expenses'
means any expenses which--
``(i) are made for the benefit of an individual with a
disability who is a designated beneficiary of the trust, and
``(ii) approved under regulations established by the
Secretary.
``(B) Expenses included.--The following expenses shall be
qualified disability expenses if made for the benefit of an
individual with a disability who is a designated beneficiary
of the trust:
``(i) Education.--Expenses for education, including tuition
for preschool thru post-secondary education, books, supplies,
and educational materials related to such education, tutors,
and special education services.
``(ii) Housing.--Expenses for housing, including the
purchase of a home or interest in a home, rent, mortgage
payments, home improvements and modifications, maintenance
and repairs, real property taxes, and utility charges.
``(iii) Transportation.--Expenses for transportation,
including the use of mass transit, the purchase or
modification of vehicles, and moving expenses.
``(iv) Employment support.--Expenses related to obtaining
and maintaining employment, including job-related training,
assistive technology, and personal assistance supports.
``(v) Health, prevention, and wellness.--Expenses for the
health and wellness, including premiums for health insurance,
medical, vision, and dental expenses, habilitation and
rehabilitation services, durable medical equipment, therapy,
respite care, long term services and supports, and
nutritional management.
``(vi) Life necessities.--Expenses for life necessities,
including clothing, activities which are religious, cultural,
or recreational, supplies and equipment for personal care,
community-based supports, communication services and devices,
adaptive equipment, assistive technology, personal assistance
supports, financial management, legal fees, and

[[Page S8871]]

administrative services, expenses for oversight, monitoring,
or advocacy, funeral and burial, and Medicaid payback.
``(vii) Other approved expenses.--Any other expenses which
are approved by the Secretary under regulations and
consistent with the purposes of this section.
``(viii) Assistive technology and personal support
services.--Expenses for assistive technology and personal
support with respect to any item described in clauses (i)
through (vii).
``(3) Individual with a disability.--An individual is an
individual with a disability if such individual--
``(A) would be eligible to receive supplemental security
income benefits due to blindness or disability under title
XVI of the Social Security Act, or disability benefits under
Title II of the Social Security Act, notwithstanding--
``(i) the income and assets tests and substantial gainful
activity test required for eligibility for such benefits, and
``(ii) whether a determination has been made that such
individual is blind or disabled, or
``(B) is eligible to receive or is deemed to be receiving
supplemental security income benefits due to blindness or
disability under title XVI of the Social Security Act, or
disability benefits under title II of the Social Security
Act.
``(4) Rules relating to estate and gift tax.--Rules similar
to the rules of paragraphs (2), (4), and (5) of section
529(c) shall apply for purposes of this section.
``(c) Tax Treatment of Distributions.--
``(1) In general.--Except as otherwise provided in this
subsection, any amount paid or distributed out of an ABLE
account shall be included in gross income by the payee or
distributee, as the case may be, for the taxable year in
which received in the manner as provided in section 72.
``(2) Distributions for benefit of designated
beneficiary.--
``(A) In general.--No amount shall be includible in gross
income under paragraph (1) if the qualified disability
expenses of the designated beneficiary during the taxable
year are not less than the aggregate distributions during the
taxable year.
``(B) Distributions in excess of expenses.--If such
aggregate distributions exceed such expenses during the
taxable year, the amount otherwise includible in gross income
under paragraph (1) shall be reduced by the amount which
bears the same ratio to the amount which would be includible
in gross income under paragraph (1) (without regard to this
subparagraph) as the qualified disability expenses bear to
such aggregate distributions.
``(C) Disallowance of excluded amounts as deduction,
credit, or exclusion.--No deduction, credit, or exclusion
shall be allowed to the taxpayer under any other section of
this chapter for any qualified disability expenses to the
extent taken into account in determining the amount of the
exclusion under this paragraph.
``(3) Additional tax for distributions not used for benefit
of designated beneficiary.--
``(A) In general.--The tax imposed by this chapter for any
taxable year on any taxpayer who receives a payment or
distribution from an ABLE account shall be increased by 10
percent of the amount thereof which is includible in gross
income under paragraph (1).
``(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 if--
``(i) such distribution is made before the 60th day after
the date on which the contribution was made, 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) Rollovers.--Paragraph (1) 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--
``(A) another ABLE account for the benefit of--
``(i) the same beneficiary, or
``(ii) an individual who--

``(I) is the spouse of such individual with a disability,
or bears a relationship to such individual with a disability
which is described in section 152(d)(2), and
``(II) is also an individual with a disability, or

``(B) any trust which is described in subparagraph (A) or
(C) of section 1917(d)(4) of the Social Security Act and
which is for the benefit of an individual described in clause
(i) or (ii) of subparagraph (A).

The preceding sentence shall not apply to any payment or
distribution if it applied to any prior payment or
distribution during the 12-month period ending on the date of
the payment or distribution.
``(5) Change in beneficiary.--Any change in the beneficiary
of an ABLE account shall not be treated as a distribution for
purposes of paragraph (1) if the new beneficiary is an
individual described in paragraph (4)(A)(ii) as of the date
of the change.
``(d) Tax Treatment of Accounts.--Rules similar to the
rules of paragraphs (2) and (4) of section 408(e) shall apply
to any ABLE account.
``(e) Community Property Laws.--This section shall be
applied without regard to any community property laws.
``(f) Custodial Accounts.--For purposes of this section, a
custodial account shall be treated as a trust if--
``(1) the assets of such account are held by a bank (as
defined in section 408(n)), a broker dealer (as defined in
section 15 of the Securities Exchange Act of 1934), an
investment company registered under the Investment Company
Act of 1940, an investment advisor registered under the
Investment Advisors Act of 1940, or another person who
demonstrates, to the satisfaction of the Secretary, that the
manner in which he will administer the account will be
consistent with the requirements of this section,
``(2) the custodial account would, except for the fact that
it is not a trust, constitute an account described in
subsection (b)(1), and
``(3) the custodial account holder is a person described in
subsection (b)(1)(B)(ii), (iii), or (iv).

For purposes of this title, in the case of a custodial
account treated as a trust by reason of the preceding
sentence, the bank or other custodian of such account shall
be treated as the trustee thereof. Such bank or other
custodian shall be entitled to rely, without further duty of
inquiry or liability to any person, upon the signed written
statement (which may be included on a check or withdrawal
slip) of the custodial account holder that a payment or
distribution from such account is made solely to pay, or to
reimburse a payment for, a qualified disability expense.
``(g) Reports.--The trustee, custodian, and account holder
of an ABLE account shall make such reports regarding such
account to the Secretary and to the beneficiary of the
account with respect to contributions, distributions, and
such other matters as the Secretary may require. The reports
required by this subsection 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.
``(h) Inflation Adjustment.--
``(1) In general.--In the case of any taxable year
beginning after 2010, the $500,000 dollar amount under
subsection (b)(1)(A)(i)(II) shall be increased by an amount
equal to--
``(A) such dollar amount, multiplied by
``(B) the cost of living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `calendar year 2009'
for `calendar year 1992' in subparagraph (B) thereof.
``(2) Rounding.--If any amount as adjusted under paragraph
(1) is not a multiple of $1,000, such amount shall be rounded
to the next lowest multiple of $1,000.
``(i) Regulations.--The Secretary shall prescribe temporary
or final regulations or other published guidance to carry out
the purposes of this section within six months of the date of
enactment, including regulations to prevent fraud and abuse
with respect to amounts claimed as qualified disability
expenses.''.
(2) Conforming amendments.--
(A) Tax on excess contributions.--
(i) In general.--Subsection (a) of section 4973 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
530A),''.
(ii) Excess contributions.--Section 4973 is amended by
adding at the end the following new subsection:
``(h) Excess Contributions to ABLE Accounts.--For purposes
of this section, in the case of an ABLE account (within the
meaning of section 530A), the term `excess contributions'
means the sum of--
``(1) the amount by which the sum of the amount contributed
for the same designated beneficiary for the taxable year to
such accounts plus such amounts contributed for all preceding
taxable years exceeds the amount described in section
530A(b)(1)(A)(ii), and
``(2) the amount determined under this section for the
preceding taxable year, reduced by the distributions from
such account which were includible in gross income under
section 530A(c)(1).

For purposes of this section, an amount which is distributed
out of an ABLE account in a distribution to which section
530A(c)(3)(C) applies shall be treated as an amount not
contributed.''.
(B) Tax on prohibited transactions.--
(i) In general.--Paragraph (1) of section 4975(e) is
amended by redesignating subparagraph (G) as subparagraph
(H), by striking ``or'' at the end of subparagraph (F), and
by adding after subparagraph (F) the following:
``(G) an ABLE account described in section 530A, or''.
(ii) Exemption.--Subsection (d) of section 4975 is amended
by striking ``or'' at the end of paragraph (22), by striking
the period at the end of paragraph (23) and inserting ``;
or'', and by inserting after paragraph (23) the following:
``(24) in the case of an ABLE account, any transaction to
provide housing or other services by a family member to or
for the designated beneficiary of the trust to the extent
that such transaction does not exceed the fair market value
of the housing or service (as the case may be) provided.''.

[[Page S8872]]

(iii) Special rule.--Subsection (c) of section 4975 is
amended by adding at the end the following new paragraph:
``(7) Special rule for able accounts.--An individual for
whose benefit an ABLE account is established and any
contributor to such account shall be exempt from the tax
imposed by this section with respect to any transaction
concerning such account (which would otherwise be taxable
under this section) if section 530A(d) applies with respect
to such transaction.''.
(C) Rollovers from certain other tax favored accounts.--
(i) Qualified tuition programs.--Paragraph (3) of section
529(c) is amended by adding at the end the following new
subparagraph:
``(E) Contributions to able account.--Subparagraph (A)
shall not apply to that portion of any distribution which,
within 60 days of such distribution, is contributed to an
ABLE account for the benefit of the designated
beneficiary.''.
(ii) Education savings accounts.--Subsection (d) of section
530 is amended by adding at the end the following new
paragraph:
``(10) Contributions to able account.--Paragraph (1) shall
not apply to any amount paid or distributed from a Coverdell
education savings 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 an ABLE account for the
benefit of the same beneficiary.''.
(iii) Health savings accounts.--Subparagraph (A) of section
223(f)(5) is amended--

(I) by inserting ``(i)'' before ``into a health savings
account'', and
(II) by inserting ``or (ii) into an ABLE account for the
benefit of such beneficiary'' before ``not later than the
60th day''.

(iv) Certain iras.--Subparagraph (A) of section 408(d)(3)
is amended by striking ``or'' at the end of clause (i), by
striking the period at the end of clause (ii) and inserting
``; or'', and by inserting after clause (ii) the following
new clause:
``(iii) the entire amount received (including money and
other property) is paid into an ABLE account for the benefit
of the child or grandchild of such individual not later than
the 60th day after the day on which the payment or
distribution is received.''.
(D) Reports.--Paragraph (2) of section 6693(a) is amended
by striking ``and'' at the end of subparagraph (D), by
striking the period at the end of subparagraph (E) and
inserting ``and'', and by inserting after subparagraph (E)
the following new subparagraph:
``(F) section 530A(g) (relating to ABLE accounts).''.
(E) Exclusion from income under ssi.--Subsection (b) of
section 1612 of the Social Security Act (42 U.S.C. 1382a) is
amended by striking ``and'' at the end of paragraph (24), by
striking the period at the end of paragraph (25) and
inserting ``; and'', and by inserting after paragraph (25)
the following:

``(26) any contribution to an ABLE account.''.
(F) Clerical amendment.--The table of parts for subchapter
F of chapter 1 is amended by inserting after the item
relating to part VIII the following new item:

``Part IX. Savings for Individuals With Disabilities.''.

(b) Annual Reports.--
(1) In general.--The Secretary of the Treasury shall report
annually to Congress on the usage of ABLE accounts under
section 530A of the Internal Revenue Code of 1986.
(2) Contents of report.--Any report under paragraph (1)
shall include--
(A) the number of people with ABLE accounts,
(B) the total amount of contributions to such accounts,
(C) the total amount and nature of distributions from such
accounts,
(D) issues relating to the abuse of such accounts, if any,
and
(E) the amounts repaid from such accounts to State Medicaid
programs established under title XIX of the Social Security
Act.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 904. STUDY ON THE USE OF ABLE ACCOUNTS.

(a) In General.--The Secretary of the Treasury (or the
Secretary's delegate), in consultation with the Secretary of
Health and Human Services, shall conduct a study on the use
of ABLE accounts (as defined by section 530A(a) of the
Internal Revenue Code). Such study shall consider the effect
that a tax credit or a refundable matching tax credit would
have on the use of and contributions to such accounts.
(b) Report.--Not later than 5 years after the date of the
enactment of this Act, the Secretary of the Treasury shall
report to Congress on the study conducted under subsection
(a).

SEC. 905. TREATMENT OF ABLE ACCOUNTS UNDER CERTAIN FEDERAL
PROGRAMS.

(a) Treatment as a Medicaid Excepted Trust.--Paragraph (4)
of section 1917(d) of the Social Security Act (42 U.S.C.
1396p(d)(4)) is amended by adding at the end the following
new subparagraph:
``(D) An ABLE account described in section 530A(b)(1) of
the Internal Revenue Code of 1986.''.
(b) 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 any ABLE account of
such individual, and any distribution for qualified
disability expenses (as defined in section 530A(b)(2)) 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.
______