Bill > S4100

Introduced Session

This bill expands the "New Jersey Achieving a Better Life Experience (ABLE) Program," P.L.2015, c.185 (C.52:18A-250 et al.) to incentivize qualified individuals with disabilities and their families to save for disability-related expenses in tax-advantaged savings accounts, known as ABLE accounts. Pursuant to current federal statute, qualified individuals who have significant disabilities with onset prior to age 26 years, and who receive Supplemental Security Income or Social Security Disability Insurance benefits, may contribute as much as the federal gift tax limit, or $15,000 in 2020, to a qualifying ABLE account. Individuals with disabilities, or their parent or guardian, may open an ABLE account in the individual's state of residence, or in another state. As of January 2021, over 44 ABLE plans operated nationwide. Funds deposited into an ABLE account may only be used for qualifying disability-related expenses such as transportation, housing, education, assistive technology, legal fees, and personal support services. Distributions from a New Jersey ABLE account are not subject to federal tax, provided the distributions do not exceed the individual's disability-related expenses for the year. New Jersey statute currently limits total lifetime contributions to an ABLE account to $305,000. Once the value of an ABLE account exceeds $100,000, SSI cash benefits for the ABLE account owner are suspended until the account's value falls below this threshold. However, a qualifying individual will not lose Medicaid benefits, no matter the balance in an ABLE account. Pursuant to the bill, all contributions to a qualifying New Jersey ABLE account are fully-deductible on a New Jersey State tax return, similar to qualifying contributions to the State's Section 529 educational savings program, known as the NJBEST. The bill additionally incentivizes taxpayer savings in New Jersey ABLE accounts by providing up to $1,000 in dollar-for-dollar matching funds for taxpayers whose gross annual income equals $200,000 or less, and who deposit funds into a newly opened ABLE account. Under the bill, moreover, for every $25,000 an individual saves in an ABLE account, the State will provide a $500 contribution to the account. It is important to note, however, that the savings incentives instituted under this bill are subject to the annual appropriations process. Therefore, the bill authorizes the Department of Human Services to select a methodology for allocating these incentive funds in years in which State appropriations for these incentive payments are insufficient to fulfill the provisions of the bill. It is the intent of the bill's sponsor to make the New Jersey ABLE program as advantageous a savings vehicle for qualifying New Jersey taxpayers, as is the NJBEST 529 College Savings Plan.

AI Summary

Committee Categories

Tony Bucco (R)*,  Stephen Sweeney (D)*, 

Introduced in the Senate, Referred to Senate Health, Human Services and Senior Citizens Committee (on 11/12/2021)