Citations Affected: IC 6-3; IC 6-8; noncode.
Synopsis: Indiana long term care savings plan. Establishes a long term
care savings plan (plan) for a participant to fund an account to pay
eligible long term care expenses of the participant. Establishes a board
of directors (board) to develop and implement the plan. Designates the
treasurer of state as the board chair. Authorizes the board to: (1)
administer the plan; (2) enter into agreements with financial
institutions to receive participant contributions in the form of account
deposits; or (3) do both. Limits plan contributions to $165,000 during
a participant's lifetime. Indexes the limitation for inflation. Provides a
state income tax deduction of $1,000 for an individual and $2,000 for
a joint return for contributions to the plan in a taxable year. Provides
that qualified withdrawals from the plan to pay eligible long term care
expenses are exempt from state income tax, and nonqualified
withdrawals are subject to a 10% penalty and state income tax on the
amount withdrawn. Establishes a long term care savings plan trust
(trust) administered and managed by the board to invest participants'
contributions to the plan. Provides that the plan and trust are not
obligations of the state.
Effective: July 1, 2009.
January 13, 2009, read first time and referred to Committee on Ways and Means.
February 19, 2009, amended, reported _ Do Pass.
February 23, 2009, read second time, amended, ordered engrossed.
A BILL FOR AN ACT to amend the Indiana Code concerning
from an account that is terminated less than twelve (12)
months after the account is opened;
(2) as a result of the death or disability of the participant; or
(3) to transfer a participant's account to the participant's spouse.
(f) Each taxable year, a participant who makes a contribution to an account may deduct from the individual's adjusted gross income (as defined in IC 6-3-1-3.5(a)) the lesser of:
(1) the amount of the contribution made by the participant during the taxable year; or
(2) one thousand dollars ($1,000).
(g) Notwithstanding subsection (f), a husband and wife filing a joint adjusted income tax return for a particular taxable year may not claim a deduction under this section of more than two thousand dollars ($2,000).
(h) The following are exempt from the adjusted gross income tax imposed by IC 6-3-1 through IC 6-3-7:
(1) A qualified withdrawal from an account.
(2) Earnings from a participant's contributions that are credited to a participant.
(i) A nonqualified withdrawal from an account is subject to a ten percent (10%) penalty and payment of adjusted gross income tax imposed by IC 6-3-1 through IC 6-3-7 on the amount of the withdrawal. A payment under this subsection shall be reported by the participant on the participant's annual state income tax return for any taxable year in which a nonqualified withdrawal is made.
(j) A nonresident participant who is not required to file an annual income tax return for a taxable year in which a nonqualified withdrawal is made shall make any required payment on the form required under IC 6-3-4-1(2). If the nonresident participant does not make the required payment, the department shall issue a demand notice in accordance with IC 6-8.1-8-2.
(1) an expense paid by a participant for long term care provided to the participant; or
(2) a premium paid by a participant who is at least fifty (50) years of age for a qualified long term care policy for the participant.
Sec. 4. As used in this chapter, "financial institution" has the meaning set forth in IC 5-13-4-10.
Sec. 5. As used in this chapter, "Internal Revenue Code" has the meaning set forth in IC 6-3-1-11.
Sec. 6. As used in this chapter,"long term care" has the meaning set forth in IC 12-15-39.6-1.
Sec. 7. As used in this chapter, "participant" means an individual who is participating in the plan.
Sec. 8. As used in this chapter, "plan" refers to the Indiana long term care savings plan established by section 12(a) of this chapter.
Sec. 9. As used in this chapter, "qualified long term care policy" has the meaning set forth IC 12-15-39.6-5.
Sec. 10. As used in this chapter, "taxable year" has the meaning set forth in IC 6-3-1-16.
Sec. 11. As used in this chapter, "trust" refers to the Indiana long term care savings plan trust established by section 21(a) of this chapter.
Sec. 12. (a) The Indiana long term care savings plan is created for the purpose of funding by a participant on a tax-favored basis an account to pay eligible long term care expenses of the participant.
(b) The board may:
(1) administer the plan;
(2) enter into agreements with one (1) or more financial institutions to receive contributions in the form of account deposits; or
Sec. 13. (a) The board of directors of the plan is established. The board consists of the following:
(1) The following serve as ex officio members or directors:
(A) The treasurer of state.
(B) The commissioner of the department of insurance.
(2) Three (3) members or directors appointed by the governor as follows:
(A) One (1) member or director must be a representative of the long term care planning industry.
principal and shall be executed by a surety company authorized to
transact business in Indiana. The board shall pay the cost of the
Sec. 17. (a) The board may accept gifts, bequest, donations, and devises of personal and real property:
(1) as trustees for the maintenance, use, or benefit of the plan or the trust; or
(2) to be administered for other public or charitable purposes for the benefit or use of participants.
(b) The board may receive, accept, hold, administer, and use any property transferred to the board by gift, bequest, donation, or devise in accordance with the terms, conditions, obligations, liabilities, and burdens imposed of the gift, bequest, donation, or devise if, in the judgment of the board, the action is in the best interest of the board, the plan, the trust, or the participants, as applicable.
(c) The board may, if not inconsistent with the terms and conditions of a gift of real property:
(1) sell, convey, or otherwise dispose of the real property; and
(2) invest, reinvest, or use the proceeds as, in the judgment of the board, is of the greatest benefit to the board, the plan, the trust, and the participants.
(d) When acting under the powers granted by this chapter, members of the board serve as trustees of a private trust, subject to:
(1) the terms and conditions of:
(A) the plan; or
(B) the gift, bequest, donation, or devise; and
(2) the law applicable to private trusts.
Sec. 18. The board shall do the following:
(1) Provide each member, officer, employee, consultant, counsel, and agent of the board a defense in a suit arising out of the performance of duties for or on behalf of the board or the plan, if the board determines that the duties were performed in good faith.
(2) Save a person described in subdivision (1) harmless from any liability, cost, or damage in connection with an action arising out of the performance of duties for or on behalf of the board or the plan, including the payment of any legal fees, except where the liability, cost, or damage is predicated on, or arises out of the bad faith of the person, or is based on the person's malfeasance in the performance of duties.
the administration, operation, and maintenance of the trust.
(c) The trust consists of the following:
(1) Each participant's contributions to the plan.
(2) All earnings on investments or deposits of the plan.
(3) All gifts, grants, devises, or bequests in money, property, or another form made to the plan.
(4) All contributions or payments to the plan made in a manner provided by the general assembly.
(d) The administrative costs of the plan, including the surety bond required by section 16(c) of this chapter, shall be paid from the earnings of the trust before the earnings are credited to participants' accounts.
(e) The board shall establish an account for each participant. Each participant's account shall be credited with:
(1) the contributions made to the plan by the participant; and
(2) after the costs described in subsection (d), the earnings attributable to the balance of the account.
Sec. 22. (a) The board has all powers necessary to carry out the purposes, objectives, and provisions of the trust established by section 21(a) of this chapter, including the powers provided under IC 30-4 for trustees of a private trust.
(b) The board has the fiduciary responsibility to make all decisions regarding the investment of the money in the trust, including the selection of all investment options and the approval of all fees and other costs charged to trust assets, including the costs of administration, operation, and maintenance of the trust, in the manner provided by IC 30-4 for trustees of a private trust.
Sec. 23. The board may adopt rules under IC 4-22-2 that it considers appropriate or necessary to implement this chapter.
Sec. 24. This chapter may not be construed as an obligation of the state to assume any responsibility for the Indiana long term care savings plan.