SB11 Passage Means Bonds for Indiana ABLE Authority Heads

able authority

Effective July 1, 2016, SB 11 will create the Achieving a Better Life Experience or ABLE Authority in the state of Indiana. Following other states’ lead, the newly created authority in Indiana will establish a qualified ABLE program, allowing people with certain disabilities to contribute money into a tax-exempt account. ABLE is similar to a 529 Plan, which is also a tax-advantaged savings plan, but is designed to encourage saving money for the cost of higher education. Before a qualified ABLE program is implemented, the following ABLE authority individuals must obtain a $100,000 surety bond:

  • Chairperson
  • Vice chairperson
  • Manager
  • Any officer elected by the authority or member of the authority authorized to handle funds and/or sign checks

What is the ABLE Act?

The ABLE act was signed into law by President Obama on Friday, December 19, 2014, amending Section 529 of the Internal Revenue Service Code of 1986 to allow people with disabilities to establish tax-free accounts to cover the cost of qualified expenses—education, housing, transportation, etc. Although federal agencies were involved with the creation of ABLE, the program’s implementation is done on a state level for states that wish to participate. In order to qualify for an ABLE account, an individual must meet the following requirements:

  • Must have exhibited symptoms prior to age 26
  • Must clearly have severe functional limitations

Before the introduction of ABLE accounts, disabled individuals that had more than $2,000 in assets could become ineligible for many federal benefit programs. However, individuals who have an ABLE account may deposit $14,000 annually—up to $100,000—and still retain benefits such as Medicaid and Supplemental Security Income. The total amount of funds in an account may exceed $100,000, but the disabled individual’s SSI will be suspended until the funds in the account are back to $100,000 or less. Although the average cap on total allotted funds in an ABLE account is around $300,000, the exact amount is determined by the state in which the account is located. Once an ABLE account has been established, it may be accessed by the beneficiary at any time as long as they maintain their receipts to show that  they are using the funds for qualified expenses.

For more information on the ABLE Act, feel free to watch this interview with the National Down Syndrome Society President Sara Weir, VP of Advocacy & Public Policy Heather Sachs and JP Kennedy Fellow David Egan.

Why do certain members of the Indiana ABLE Authority need a bond?

Before the ABLE program can be implemented, the chairperson, vice chairperson, manager and any officer elected by or member of the authority handles funds or writes checks on behalf of the ABLE program must provide the state with a $100,000 surety bond. The bond is in place to guarantee that every member required to submit a bond will perform all duties related to their position. For example, the bond ensures that those who handle ABLE Authority funds will do so in accordance with all applicable rules and regulations, including those established by SB 11. The new law also mandates that the cost of a bond will be covered by the ABLE Authority, rather than the individual for whom the bond is written.

If it is found that a member of the ABLE Authority fails to perform any duties promised by the submission of a surety bond to the state, then a claim may be filed up to the full amount of the bond. If the claim is valid, then up to $100,000 may be paid out in order to reach a settlement. Should the surety that issued the bond be forced to pay any money in the claims process, then it becomes the responsibility of the principal (individual who submitted the bond) to pay the surety back in a timely manner. If the surety does not receive reimbursement after paying a settlement, it may take legal action against the principal to collect the money it is owed.

If you need to purchase a surety bond in order to establish an ABLE Authority in Indiana, contact the experts at today and get your free, no obligation quote.

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About the Author

Jon Gottschalk
Jon Gottschalk is the Senior Marketing Director for and regularly blogs at the Surety Bond Insider to keep consumers informed on new legislation and updates in the commercial surety industry. He is also a licensed property & casualty insurance producer in Missouri.