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A07473 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
SPONSOR: Gunther
  TITLE OF BILL: An act to amend the mental hygiene law, in relation to increasing the maximum account balance for the New York ABLE program   PURPOSE:: The purpose of this legislation is to increase the maximum account balance for the New York Achieving A Better Life Experience (NY ABLE) Program to match the federally authorized level.   SUMMARY OF PROVISIONS:: Section 1 of this proposal amends section 84.09 of the mental hygiene law. Section 2 of this proposal provides for an immediate effective date.   JUSTIFICATION:: The federal ABLE Act (Internal Revenue Code § 529A) authorizes a state to set its maximum account balance in an amount not to exceed the maxi- mum account balance set for its 529 College Savings Program which is currently set at $520,000. In most states, the ABLE maximum account balance is similar or equal to that of the federally authorized maximum set for that state's 529 College Savings Program. In 2015, when the New York Achieving A Better Life Experience Program (NY ABLE or Program) was originally enacted, the maximum account balance was set at one hundred thousand dollars ($100,000), and contributions to the Program were eligible for a New York State tax deduction. However, the NY ABLE Act was signed contingent on the enactment of a chapter amendment eliminating this state tax benefit, and, in 2016, the New York State tax deduction was eliminated without a corresponding amendment to increase the Program's maximum account balance. Consequently, New York's current maximum account balance is the second lowest of any ABLE program in the country, even though the administration of NY ABLE does not result in a direct loss of tax revenue to the State. The maximum ABLE account balances of neighboring states which track the 529 maximum in each are as follows: Massachusetts: $400,000; New Jersey: $305,000; and Pennsylvania: $511,758. New York's ABLE Program has a $100,000 maximum, far below New York's current 529 College Savings Program maximum of $520,000. As a result of legislative changes in the federal Tax Cuts and Jobs Act, beginning in 2018, the current maximum annual contribution amount increased to over twenty-seven thousand dollars ($27,000) per year for ABLE program participants who are employed. Since 2019 marks the third calendar year in which NY ABLE has been available to participants, the maximum account balance of $100,000 may be reached within the next two years. Increasing the allowable maximum account balance in the NY ABLE Program to an amount equal to the federally authorized level for the 529 College Savings Program would align NY ABLE with several other states' ABLE programs and enable participants to maximize the benefits offered by the Program.   PRIOR LEGISLATIVE HISTORY:: New bill.   FISCAL IMPLICATIONS FOR STATE: This change would be revenue-neutral to the State of New York, since contributions to the NY ABLE Program are not tax deductible.   EFFECTIVE DATE:: This act shall take effect immediately.
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