Iowa Code 12I.3 – Participation agreements for trust
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The trust may enter into participation agreements pursuant to the following terms and agreements:
1. a. Unless otherwise permitted under section 529A of the Internal Revenue Code, the treasurer of state shall allow only one participation agreement per designated beneficiary.
b. Unless otherwise permitted under section 529A of the Internal Revenue Code, the account owner must also be the designated beneficiary of the account. A person other than the account owner may enter into a participation agreement and have signature authority over the account on behalf of the account owner in accordance with section 529A of the Internal Revenue Code and regulations promulgated under that section.
c. The treasurer of state shall set an annual contribution limit and account balance limit to maintain compliance with section 529A of the Internal Revenue Code. A contribution shall not be permitted to the extent it exceeds the annual contribution limit or causes the aggregate balance of the account established for the designated beneficiary to exceed the applicable account balance limit.
d. 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 shall not exceed the maximum deductible amount determined for the year pursuant to section 12D.3, subsection 1.
e. Participation agreements may be amended to provide for adjusted levels of contributions based upon changed circumstances or changes in disability-related expenses.
f. Any person may make contributions pursuant to a participation agreement on behalf of a designated beneficiary under rules adopted by the treasurer of state.
g. Any funds retained in a medical assistance special needs trust pursuant to chapter 633C, or in a supplemental needs trust pursuant to chapter 634A, may be transferred to the Iowa ABLE savings plan trust account of a designated beneficiary who is also the beneficiary of any such trust, in accordance with the applicable provisions of chapters 633C, 634A, and this chapter.
Terms Used In Iowa Code 12I.3
- Account balance limit: means the maximum allowable aggregate balance of an account established for a designated beneficiary. See Iowa Code 12I.1
- Account owner: means an individual who is the designated beneficiary under a participation agreement under this chapter for the payment of qualified disability expenses on behalf of the designated beneficiary. See Iowa Code 12I.1
- 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 individual who is a resident of this state or a resident of a contracting state and who meets the definition of "eligible individual" 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
- Participation agreement: means an agreement establishing an account with the trust. See Iowa Code 12I.1
- person: means individual, corporation, limited liability company, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, or any other legal entity. See Iowa Code 4.1
- Rule: includes "regulation". See Iowa Code 4.1
- Signature: includes an electronic signature as defined in section 554D. 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
- Trust account: A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. Source: OCC
- year: means twelve consecutive months. See Iowa Code 4.1
2. The execution of a participation agreement by the trust shall not guarantee in any way that future disability-related expenses will be equal to projections and estimates provided by the trust or that the account owner or designated beneficiary is guaranteed any of the following:
a. A return of principal.
b. A rate of interest or other return from the trust.
c. Payment of interest or other return from the trust.
3. a. A designated beneficiary under a participation agreement may be changed as permitted under rules adopted by the treasurer of state upon written request of the account owner as long as such change would be permitted by section 529A of the Internal Revenue Code.
b. Participation agreements may otherwise be freely amended throughout their terms in order to enable account owners to increase or decrease the level of participation, change the designated beneficiary, and carry out similar matters as authorized by rule.
4. Each participation agreement shall provide that the participation agreement may be canceled upon the terms and conditions, and upon payment of applicable fees and costs set forth and contained in the rules adopted by the treasurer of state.