South Carolina Code 11-5-440. Opening of account by designated beneficiary; contributions; account owner powers; distributions; accounting; tax exemption
(1) name, address, and social security number of the account owner;
Terms Used In South Carolina Code 11-5-440
- account: means an individual savings account established in accordance with the provisions of this article and pursuant to Section 529A of the federal Internal Revenue Code of 1986, as amended. See South Carolina Code 11-5-410
- Account owner: means the person who enters into a Palmetto ABLE account agreement pursuant to the provisions of this article. See South Carolina Code 11-5-410
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- 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
- Designated beneficiary: means an eligible individual whose qualified disability expenses may be paid from the account. See South Carolina Code 11-5-410
- Garnishment: Generally, garnishment is a court proceeding in which a creditor asks a court to order a third party who owes money to the debtor or otherwise holds assets belonging to the debtor to turn over to the creditor any of the debtor
- Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
- Member of the family: has the meaning defined in Section 529A of the federal Internal Revenue Code of 1986, as amended. See South Carolina Code 11-5-410
- Power of attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Source: OCC
- Program: means the Palmetto ABLE Savings Program established pursuant to this article. See South Carolina Code 11-5-410
- Secretary: means the Secretary of the United States Treasury. See South Carolina Code 11-5-410
- Trustee: A person or institution holding and administering property in trust.
(2) name, address, and social security number of the designated beneficiary, if the account owner is the beneficiary’s trustee or guardian;
(3) certification relating to no excess contributions; and
(4) additional information as the State Treasurer may require.
(B) A person may make contributions to a Palmetto ABLE account after the account is opened, subject to the limitations imposed by Section 529A of the federal Internal Revenue Code of 1986, as amended, or any adopted rules and regulations promulgated by the State Treasurer pursuant to this article.
(C) Contributions to a Palmetto ABLE account may be made only in cash. The State Treasurer or program manager shall reject or withdraw contributions promptly:
(1) in excess of the limits established pursuant to subsection (B); or
(2) the total contributions if the:
(a) value of the account is equal to or greater than the account maximum established by the State Treasurer. The account maximum must be equal to the account maximum for post secondary education savings accounts; or
(b) designated beneficiary is not an eligible individual in the current calendar year.
(D)(1) An account owner may:
(a) change the designated beneficiary of an account to an individual who is a qualified member of the family of the prior designated beneficiary in accordance with procedures established by the State Treasurer; and
(b) transfer all or a portion of an account to another ABLE account, the designated beneficiary of which is a member of the family as defined in Section 529A of the federal Internal Revenue Code of 1986, as amended.
(2) An account owner may not use an interest in an account as security for a loan. A pledge of an interest in an account is of no effect.
(E)(1) If there is any distribution from an account to an individual or for the benefit of an individual during a calendar year, the distribution must be reported to the federal Internal Revenue Service and each account owner, the designated beneficiary, or the distributee to the extent required by state or federal law.
(2) A statement must be provided to each account owner annually and at other increments established by the State Treasurer in the program guidelines. The statement must contain the information the State Treasurer requires to be reported to the account owner.
(3) A statement and information relating to an account must be prepared and filed to the extent required by this article and other state or federal law.
(F)(1) The program shall provide separate accounting for each designated beneficiary. An annual fee may be imposed upon the account owner for the maintenance of an account.
(2) Funds held in a Palmetto ABLE account:
(a) are exempt from attachment, execution, or garnishment for claims of creditors of the contributor and the designated beneficiary;
(b) to the fullest extent permissible under state and federal law, will be disregarded for the purposes of determining a designated beneficiary’s eligibility to receive, or the amount of, any public assistance available to the designated beneficiary, including Medicaid; and
(c) following the death of a designated beneficiary, may be subject to recovery by the South Carolina Department of Health and Human Services up to an amount equal to the total of Medicaid benefits, if any, paid on behalf of the designated beneficiary by the state Medicaid program, but only to the extent recovery is required by state or federal law. Recovery by the State is subject to regulations imposed by the Secretary.
(3) The amount distributed from a Palmetto ABLE account for the purposes of paying qualified disability expenses:
(a) are exempt from attachment, execution, or garnishment for claims of creditors of the contributor and the designated beneficiary; and
(b) to the fullest extent permissible under state and federal law, will be disregarded for the purposes of determining a designated beneficiary’s eligibility to receive, or the amount of, any public assistance available to the designated beneficiary, including Medicaid.
(G) To the extent earnings in an ABLE account and distributions from an ABLE account, or a qualified account under Section 529A located in another state, are not subject to federal income tax, they will not be subject to state income tax.