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S.F. No. 39 - The Minnesota ABLE Act - the A-1 Delete-Everything Amendment
Author: Senator John A. Hoffman
Prepared By: Liam Monahan, Senate Analyst (651/296-1791)
Date: February 9, 2015


 This bill establishes the Minnesota Achieving a Better Life Experience (ABLE) savings plan. The purposes of this act are to encourage and assist individuals and families in saving private funds for the purposes of supporting persons with disabilities to maintain health, independence, and quality of life, and to provide secure funding for disability-related expenses on behalf of beneficiaries that will supplement, but not supplant, benefits provided through private insurance, federal and state medical and disability insurance, the beneficiary’s employment, and other sources.

Summary of important federal ABLE Act provisions based on current state and federal law:

  • Eligible Individuals and Contribution Limits: Persons of any age with qualifying disabilities or blindness may establish in the state in which they reside a tax-exempt ABLE savings account, provided the individual’s blindness or disability occurred before the individual turned 26. No individual may have more than one account. Anyone may make after-tax contributions to any account. The annual total contributions from all sources to any single account may not exceed $14,000. No contributions that would cause an account balance to exceed $350,000 are permitted.
  • Earnings and Distributions: Earnings on account assets may be withdrawn tax-free provided the funds are used for the beneficiary’s qualified disability expenses, which include education, housing, transportation, employment training and support, assistive technology and personal support services, health and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, and funeral and burial expenses. Earnings withdrawn for expenses that are not qualifying expenses are subject to applicable taxes as well as a ten percent penalty.
  • Disregards for Purposes of Eligibility: Any amount in an ABLE account, any contributions to an ABLE account, and any qualified distribution from an ABLE account are disregarded for purposes of determining eligibility for federal assistance or benefits, including Medicaid, except that for purposes of Supplemental Security Income (SSI), distributions for housing expenses are not disregarded and only total account balances below $100,000 are disregarded.
  • State Reimbursement.  Upon the death of the account beneficiary, the state may claim reimbursement from the account for medical costs incurred on the beneficiary’s behalf.

Section 1 places notice in Minnesota Statutes, chapter 13, Minnesota Government Data Practices Act, that section 256Q.05, subdivision 8, classifies data as other than public, places restrictions on access to government data, or involves data sharing.

Section 2 establishes the Minnesota ABLE plan and states its purpose.

Section 3 provides a citation for chapter 256Q.

Section 4 provides definitions, many of which are defined by cross-reference.

Section 5 requires the Minnesota ABLE plan to meet the federally mandated requirements for a qualifying ABLE program.  These requirements are that the plan only be available to state residents, that no participant in the plan be the beneficiary of more than one account, that the plan maintain a separate account for each beneficiary, that the state limit the number of opportunities for an account owner to direct investments, and that the state prohibit the use of account balances as security for a loan.

Section 6 directs the Commissioner of Human Services in the administration of the ABLE plan by requiring the commissioner to ensure the plan conforms with federal law; requiring the commissioner to consult with the State Board of Investment and the Commissioner of the Office of Higher Education while establishing plan administration and entering into contracts; prohibiting the use of account fees to pay for the marketing of the ABLE plan; permitting the commissioner to enter into contracts with third parties to carry out some or all of the administrative duties and investment management; authorizing the commissioner to impose fees on account owners to cover administrative costs; requiring the commissioner to perform federally mandated reporting; and specifying the conditions under which the commissioner may share private and nonpublic data.

Section 7, subdivision 1, allows anyone to make a cash contribution to any account, but that contribution becomes the property to the account beneficiary, and the contributor acquires no interest in the account.

Subdivision 2 states that the annual contribution limit for each account from all sources is equal to the gift tax limit for that taxable year.  This section also states that the total account balance cannot exceed the maximum account balance limit under the Minnesota college savings plan.

Subdivision 3 specifies that only the account owner may request distributions or change the designated beneficiary of an account.

Subdivision 4 states that any amendments to chapter 256Q automatically amends ABLE plan participation agreements.

Subdivision 5 specifies that each beneficiary of an ABLE account is to have a separate account, and that plan assets are not subject to claims by creditors of the state, are not part of the general fund, and are not subject to appropriation be the state.

Section 8 requires the State Board of Investment to invest the money in the accounts in the plan in approved ways or to contract with a third party to do so. The board may charge account owners a fee to recover the costs related to investment management.

Section 9 specifies to whom and how distributions for qualifying disability expenses can be made. Section 9 also permits nonqualified distributions, but the earnings portions of such distributions are subject to applicable taxes and a ten percent penalty. Finally, section 9 permits the state, upon the death of an account’s designated beneficiary, to make a claim against the account to recover costs for medical care provided to the account’s beneficiary.


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