BEFORE THE Department of Public
health and human services of the
STATE OF MONTANA
In the matter of the adoption of New Rules I through IX pertaining to creating the Montana achieving a better life experience (ABLE) program
NOTICE OF ADOPTION
TO: All Concerned Persons
1. On May 20, 2016, the Department of Public Health and Human Services published MAR Notice No. 37-753 pertaining to the public hearing on the proposed adoption of the above-stated rules at page 869 of the 2016 Montana Administrative Register, Issue Number 10.
2. The department has adopted New Rule I (37.2.520), II (37.2.521), III (37.2.522), IV (37.2.525), V (37.2.526), VI (37.2.527), VII (37.2.530), VIII (37.2.531), and IX (37.2.532) as proposed.
3. The department has thoroughly considered the comments and testimony received. A summary of the comments received and the department's responses are as follows:
COMMENT #1: One commenter is seeking clarification as to whether the $3,000 state tax deduction for contributions to an ABLE account applies whether a Montana resident commits the funds to an in-state or out-of-state ABLE account or just to an in-state ABLE account.
RESPONSE #1: Montana residents can commit the funds to an out-of-state ABLE account. Even though the owner of the ABLE account must be a Montana resident at the moment of the contribution to qualify for the deduction, the maintenance of the ABLE account out-of-state is permitted by the statute.
Section 11 of Senate Bill (SB) 399 must be read in conjunction with Section 16 of the bill, 15-30-2110(12), MCA, shown below for your information. This section of the Montana tax code specifically provides that the ABLE account may be maintained by another state as long as it remains in conformity with section 529A(e)(7) of the Internal Revenue Code.
"15-30-2110(12)(a), MCA An individual who contributes to one or more accounts established under the Montana achieving a better life experience program or to a qualified program established and maintained by another state as provided by section 529A(e)(7) of the Internal Revenue Code, 26 U.S.C. 529A(e)(7), may reduce adjusted gross income by the lesser of $3,000 or the amount of the contribution. In the case of married taxpayers, each spouse is entitled to a reduction, not to exceed $3,000, for the spouses' contributions to the accounts. Spouses may jointly elect to treat one-half of the total contributions made by the spouses as being made by each spouse. The reduction in adjusted gross income under this subsection (12)(a) applies only with respect to contributions to an account for which the account owner is the taxpayer, the taxpayer's spouse, or the taxpayer's child or stepchild if the taxpayer's child or stepchild is a Montana resident. The provisions of subsection (1)(e) do not apply with respect to withdrawals of contributions that reduced adjusted gross income.
(b) Contributions made pursuant to this subsection (12) are subject to the recapture tax provided in 53-25-118."
COMMENT #2: A commenter stated Montana needs to have a nationally competitive ABLE program. The commenter went on to recommend Montana investigate joining a consortium of other states with ABLE accounts, thereby allowing us to pool resources and share expertise.
RESPONSE #2: The comment will be shared with the ABLE Program Oversight Committee. According to statute, the advisory committee will recommend financial institutions for approval by the department to act as managers of the accounts.
COMMENT #3: One commenter stated that no one with a disability is involved with the creation or management of this program.
RESPONSE #3: According to the statute, the ABLE program oversight committee must consist of five members as follows: (a) the director of the Department of Public Health And Human Services or the director’s designee; (b) the director of the Department of Administration or the director’s designee; and (c) three members of the general public, one of whom possesses knowledge, skill, and experience in accounting, risk management, or investment management or as an actuary and two of who have experience working on behavior of disabled individuals. The statute further states the governor will appoint the public members of the committee.
Current committee members include:
Sheila Hogan, Director, Montana Department of Administration;
Novelene Martin, Bureau Chief, Developmental Disabilities Program (designee for the Director of the Department of Public Health and Human Services), and parent of a child with a disability;
Jon Benion, parent of a child with a disability;
Kat Patterson, parent of a child with a disability and experience working in the financial industry; and
Teri Calton, experience working in the financial industry.
4. The department intends to apply these rules retroactively to January 1, 2016. A retroactive application of the rules does not result in a negative impact to any affected party.
/s/ Brenda K. Elias /s/ Richard H. Opper
Brenda K. Elias, Attorney Richard H. Opper, Director
Rule Reviewer Public Health and Human Services
Certified to the Secretary of State August 22, 2016.