Iowa Code 12I.10 – Implementation as a contracting state — tax considerations
Current as of: 2023 | Check for updates
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1. The general assembly acknowledges that section 529A of the Internal Revenue Code permits access to qualified ABLE programs by residents of a state without such a program. The general assembly finds that becoming a contracting state may accomplish the public purpose set forth in section 12I.1, subsection 1, in the same manner as if the qualified ABLE program under the Iowa ABLE savings plan trust were to be implemented and administered by this state. To that end, the treasurer of state, as trustee of the trust, may defer implementation of the qualified ABLE program under the trust and alternatively cause this state to become a contracting state by entering into an agreement with another state with a qualified ABLE program to provide Iowa residents access to that state’s qualified ABLE program. The trust shall not enter into an agreement pursuant to this section unless the treasurer, as trustee of the trust, determines that all of the following requirements are satisfied:
a. The program is a qualified ABLE program.
b. The qualified ABLE program provides comparable benefits and protections to Iowa residents as would be provided under the Iowa ABLE savings plan trust.
c. That entering into an agreement for access to the qualified ABLE program would not result in increased costs to the state or to account owners and designated beneficiaries as compared to the costs of implementing and administering the qualified ABLE program under the Iowa ABLE savings plan trust.
d. The qualified ABLE program will be audited annually by an independent certified public accountant or by the state auditor, or similar public official, of the state that has implemented the qualified ABLE program.
e. The qualified ABLE program will provide information to the treasurer of state as trustee of the trust so as to allow the trustee to fulfill the reporting requirements in section 12I.7.
Terms Used In Iowa Code 12I.10
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Contracting state: means the same as defined in section 529A of the Internal Revenue Code. See Iowa Code 12I.1
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- state: when applied to the different parts of the United States, includes the District of Columbia and the territories, and the words "United States" may include the said district and territories. See Iowa Code 4.1
- trust: means the trust created under section 12I. See Iowa Code 12I.1
- Trustee: A person or institution holding and administering property in trust.
- year: means twelve consecutive months. See Iowa Code 4.1
2. a. The maximum amount that may be deducted per year for Iowa income tax purposes by an individual for contributions on behalf of any one designated beneficiary that is a resident of this state to the qualified ABLE program with which the state has contracted pursuant to this section shall not exceed the maximum deductible amount determined for the year pursuant to section 12D.3, subsection 1.
b. State income tax treatment of the qualified ABLE program with which the state has contracted pursuant to this section shall be as provided in section 422.7, subsections 24 and 25.
3. State inheritance tax treatment of interests in the qualified ABLE program with which the state has contracted pursuant to this section shall be as provided in section 450.4, subsection 9.