HB 5923

HOUSE BILL NO. 5923
A bill to amend 2015 PA 160, entitled
"Michigan achieving a better life experience
(ABLE) program act,"
by amending sections 2, 7, 8, and 17 (MCL 206.982,
206.987, 206.988, and 206.997), section 2 as amended by 2024 PA 194.
the people of the state of michigan enact:
Sec. 2. As used in this act:
(a)
"ABLE" means achieving a better life experience.
(b) "ABLE
savings account" or "account" means an account established under
this act.
(c) "Account
owner" means an individual who is a resident of this state, or a resident
of a contracting state, and who enters into a Michigan ABLE savings program
agreement and establishes an ABLE savings account. The account owner shall be is the
designated beneficiary of the account unless the designated beneficiary is a
minor or lacks capacity to enter into an agreement, in which case a designated
representative may open an account on behalf of the minor or incapacitated
individual and serve as the account owner.
(d)
"Contracting state" means a state without a qualified ABLE program
that has entered into a contract with this state to provide its residents
access to the Michigan ABLE program.
(e)
"Department" means the department of treasury.
(f)
"Designated beneficiary" means an eligible individual designated as
the individual whose qualified disability expenses are expected to be paid from
the account. The designated beneficiary must be an eligible individual at the
time the account is established. The designated beneficiary shall be the
account owner unless that eligible individual is a minor or lacks capacity to
enter into an agreement. The account owner may change the designated
beneficiary as provided in this act.
(g)
"Designated representative" means an individual who is authorized to
act on behalf of the designated beneficiary if the designated beneficiary is a
minor or has a guardian, conservator, or other fiduciary who has been appointed
for purposes of managing that designated beneficiary's financial affairs.
(h)
"Disability certification" means that term as defined in section 529A
of the internal revenue code.
(i) "Eligible
individual" means that term as defined in section 529A of the internal
revenue code.
(j) "Internal
revenue code" means the United States internal revenue code of 1986 in
effect on January 1, 2024 2026 or at the option of the taxpayer, in effect for
the current year.
(k)
"Management contract" means the contract executed between the
treasurer and a program manager.
(l) "Member of the family" means a family member that term
as defined in section 529A of the internal revenue code.
(m) "Michigan
ABLE savings program agreement" means the agreement between the program
and an account owner that establishes an ABLE savings account.
(n)
"Program" means the Michigan ABLE savings program established
pursuant to this act.
(o) "Program
manager" means 1 or more entities selected by the treasurer to act as a
manager of the program.
(p) "Qualified
disability expenses" means that term as defined in section 529A of the
internal revenue code.
(q) "Qualified
withdrawal" means a distribution that is not subject to a penalty or an
excise tax under section 529A of the internal revenue code or taxation under
the income tax act of 1967, 1967 PA 281, MCL 206.1 to 206.847, and that meets
any of the following:
(i) A withdrawal from an account to pay the
qualified disability expenses of the designated beneficiary incurred after the
account is established.
(ii) A withdrawal made as the result of the
death or disability of the designated beneficiary of an account.
(iii) A transfer of funds due to the
termination of the management contract as provided in section 5.
(iv) A transfer of funds as provided in
section 8.
(r) "Savings
plan" or "plan" means a plan that provides different investment
strategies and allows account distributions for qualified disability expenses.
(s)
"Treasurer" means the state treasurer.
Sec. 7. (1) Beginning January 1, 2016, ABLE savings
accounts may be established under this act.
(2) Any individual
who is a resident of this state or a resident of a contracting state may open
an ABLE savings account to save money to pay the qualified disability expenses
of the designated beneficiary. Each account opened under this act shall must have
only 1 designated beneficiary. Only 1 account shall be opened for any 1
designated beneficiary.
(3) To open an ABLE
savings account, the individual or designated representative of a designated
beneficiary shall enter into a Michigan ABLE savings program agreement with the
program. The program shall recognize an individual as a designated representative
and not require a designated representative to obtain court approval before
opening and funding an ABLE savings account under this act. The Michigan ABLE
savings program agreement shall must be in the form prescribed by a program manager
and approved by the treasurer and contain all of the following:
(a) The name,
address, and social security number of the account owner.
(b) A designated
beneficiary. The name, address, and social security number of the designated
beneficiary, if the account owner is the designated beneficiary's designated
representative.
(c) Any other
information that the treasurer or program manager considers necessary.
(4) Any person may
make contributions to an account after the account is opened, subject to the
limitations imposed by section 529A of the internal revenue code or any rules
and regulations promulgated by the treasurer pursuant to this act.
(5) Contributions
to accounts shall only be made in cash, by check, by credit card, or by any
similar method as approved by the state treasurer but shall not be property.
(6) Notwithstanding
any other provision of law to the contrary, money in the ABLE savings account shall be is exempt
from creditor process and shall not be is not liable to attachment, garnishment, or other
process, nor shall it and must not be seized, taken, appropriated, or
applied by any legal or equitable process or operation of law to pay any debt
or liability of the designated beneficiary or account owner. However, this
state may be a creditor of the account in the event of the death of the
designated beneficiary as provided under section 529A(f) of the internal
revenue code.
(7) Distributions
from an account shall must be made in the following manner:
(a) In the form of
a check payable to the designated beneficiary or account owner.
(b) In the form of
an electronic funds transfer to an account specified by the designated
beneficiary or account owner.
(c) Directly to a
provider of goods and services that are qualified disability expenses, if
purchased for a designated beneficiary.
(8) Each savings
plan under the program shall must provide separate accounting for each designated
beneficiary.
Sec. 8. (1) Changes Unless prohibited by federal law, changes in account
owners or designated beneficiaries are permitted as follows:
(a) An account
owner may change the designated beneficiary of an account to another eligible
individual who is a member of the family of the previously designated
beneficiary.
(b) An account
owner may transfer all or a portion of an account to another ABLE savings
account with another designated beneficiary as long as the new designated
beneficiary of the account to which the transfer is made is an eligible
individual and a member of the family of the previous designated beneficiary.
(c) An account
owner who is a designated representative may
designate another individual as a successor owner of the account in the event
of the death of the account owner. The successor owner must meet the definition
of an account owner under this act.
(d) An account owner who is the designated beneficiary may designate
another individual as a survivor beneficiary of the account in the event of the
death of the designated beneficiary. If the survivor beneficiary is an eligible
individual, then the survivor beneficiary is the successor owner of the account
after final distributions have been made on behalf of the deceased designated
beneficiary. If the survivor beneficiary is not an eligible individual, then
any proceeds remaining after final distributions have been made on behalf of
the deceased designated beneficiary must be distributed to the survivor
beneficiary and the account must be closed.
(2) Changes in
designated beneficiaries and transfers under this section are not permitted to
the extent that the change or transfer would constitute excess contributions or
unauthorized investment choices.
(3) Unless
prohibited by federal law, upon the death of a designated beneficiary, if a
survivor beneficiary was not designated under subsection (1), any proceeds
remaining after final distributions have been made on behalf of the deceased
designated beneficiary must be transferred to the estate of the designated
beneficiary.
Sec. 17. (1) Notwithstanding any other provision of law
regarding an assistance program offered by this state 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 that provision to be provided to or for the benefit of
an individual, any amount and interest earned on an ABLE savings account for
the individual, any contributions to the ABLE savings account of the individual,
and any distribution for qualified disability expenses shall must be
disregarded as provided in section 10g of the social welfare act, 1939 PA 280,
MCL 400.10g, with respect to any period during which the individual maintains,
makes contributions to, or receives distributions from his or her the
individual's ABLE savings account.
(2) Upon the death
of the a designated
beneficiary, unless otherwise required by federal law,
the amount remaining in his or her the designated beneficiary's ABLE savings account shall be distributed pursuant to section 529A(f) of the
internal revenue code is not subject to claims
made under the Michigan Medicaid estate recovery program established under
section 112g of the social welfare act, 1939 PA 280, MCL 400.112g.
Enacting section 1.
This amendatory act does not take effect unless Senate Bill No. ____ (request
no. S06372'26) or House Bill No. 5922 (request no. H06372'26) of the 103rd
Legislature is enacted into law.