SF 2236 (LSB 5342SV (1) 90)

SENATE FILE 2236

BY  COMMITTEE ON STATE GOVERNMENT

(SUCCESSOR TO SSB 3116)

A BILL FOR

An Act relating to the treasurer of state’s duties, including Iowa educational savings plan trust and Iowa ABLE savings plan trust requirements and disposition of unclaimed property, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
IOWA EDUCATIONAL SAVINGS PLAN TRUST

    Section 1.  Section 12D.3, subsection 1, Code 2024, is amended to read as follows:
   1.  Each participation agreement may require a participant to agree to invest a specific amount of money in the trust for a specific period of time for the benefit of a specific beneficiary. A participant shall not be required to make an annual contribution on behalf of a beneficiary. The maximum contribution that may be deducted for Iowa income tax purposes shall not exceed two five thousand five hundred dollars per beneficiary per year adjusted annually to reflect increases in the consumer higher education price index, rounded up to the nearest fifty or hundred dollars. The treasurer of state shall set an account balance limit to maintain compliance with section 529 of the Internal Revenue Code. A contribution shall not be permitted to the extent it causes the aggregate balance of all accounts established for the same beneficiary under the trust to exceed the applicable account balance limit.
    Sec. 2.  Section 422.7, subsection 22, paragraph c, subparagraph (1), Code 2024, is amended by adding the following new subparagraph division:
   NEW SUBPARAGRAPH DIVISION.  (g)  A direct trustee-to-trustee transfer to a Roth individual retirement account in accordance with the rules under section 529(c)(3)(E) of the Internal Revenue Code.
    Sec. 3.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to January 1, 2024, for tax years beginning on or after that date.
DIVISION II
DISPOSITION OF UNCLAIMED PROPERTY

    Sec. 4.  Section 556.1, Code 2024, is amended by adding the following new subsection:
   NEW SUBSECTION.  15.  “Virtual currency” means a digital representation of value, other than a representation of the United States dollar or a foreign currency, that functions as a unit of account, a store of value, and a medium of exchange that uses cryptography to secure transactions that are digitally recorded on a distributed ledger, such as a blockchain.
    Sec. 5.  NEW SECTION.  556.2D  Unclaimed virtual currency.
   1.  The treasurer of state shall, in accordance with chapter 17A, adopt rules as are necessary for the method of delivery, transfer, maintenance, and sale of virtual currency that is presumed abandoned.
   2.  The treasurer of state may decline to accept virtual currency deemed abandoned if the treasurer of state determines that the virtual currency is not freely transferable, is of nominal value, or the value is less than the estimated expenses of maintenance, notice, or sale of the property.
   3.  The treasurer of state may direct a holder of virtual currency to sell virtual currency in conjunction with the holders’ reporting. A holder that sells virtual currency at the direction of the treasurer of state shall be entitled to the protections provided under section 556.13, provided that the holder has complied with the notice provisions of section 556.2 and has otherwise acted in good faith.
    Sec. 6.  Section 556.11, subsection 5, Code 2024, is amended to read as follows:
   5.  a.  If the holder of property presumed abandoned under this chapter knows the whereabouts of the owner and if the owner’s claim has not been barred by the statute of limitations, the holder shall, before filing the annual report, communicate with the owner and take necessary steps to prevent abandonment from being presumed. The holder shall exercise due diligence to ascertain the whereabouts of the owner.
   b.  If the property presumed abandoned is securities, a brokerage account, or virtual currency, the holder of property shall provide notice to the owner that the owner’s holdings may be liquidated either prior to or subsequent to reporting to the state, after which the owner will be entitled to claim the proceeds of sale only.
   c.  A holder is not required to make a due diligence mailing to owners whose property has an aggregate value of less than fifty dollars.
   d.  The treasurer of state may charge a holder that fails to timely exercise due diligence, as required in this subsection, five dollars for each name and address account reported if thirty-five percent or more of the accounts are claimed within the twenty-four months immediately following the filing of the holder report.
    Sec. 7.  Section 556.12, subsection 1, Code 2024, is amended to read as follows:
   1.  If a report has been filed with the treasurer of state, or property has been paid or delivered to the treasurer of state, for the fiscal year ending on June 30 or, in the case of unclaimed demutualization proceeds, for the preceding calendar year as required by section 556.11, the treasurer of state shall provide may do any of the following:
   a.  Provide for the publication annually of at least one notice not later than the following November 30. Each notice shall may be published at least once each week for two successive weeks in an English language newspaper of general circulation in the county in this state in which is located the last known address of any person to be named in the notice. If an address is not listed or if the address is outside this state, the notice shall may be published in the county in which the holder of the abandoned property has its principal place of business within this state.
   b.  Publish information to make the public aware of the existence of unclaimed property and the treasurer of state’s unclaimed property program in a newspaper in general circulation in the state.
    Sec. 8.  Section 556.19, Code 2024, is amended to read as follows:
   556.19  Claim Procedure for abandoned property paid or delivered.
   1.  Any person claiming an interest in any property delivered to the state under this chapter may file a claim thereto or to the proceeds from the sale thereof on the form prescribed by the state treasurer.
   2.  Notwithstanding subsection 1, the treasurer of state may waive the requirement of a claim form and pay or deliver property directly to a person if the person receiving the property or payment is shown to be the apparent owner included on a report filed under section 556.11 and the treasurer of state reasonably believes the person is entitled to receive the property or payment. The treasurer of state may use state tax information to assist in identifying the owner of property that has been abandoned as provided under this chapter or in verifying a claim filed under this chapter.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates the treasurer of state’s duties, including Iowa educational savings plan trust requirements and disposition of unclaimed property.
   DIVISION I —— IOWA EDUCATIONAL SAVINGS PLAN TRUST. The bill increases the maximum contribution to a beneficiary’s 529 account that may be deducted for income tax purposes to $5,500 per year. The maximum deduction for tax year 2023 is $3,785. Additionally, under current law the maximum deduction is adjusted annually to reflect increases in the consumer price index. Under the bill, such adjustments will instead reflect increases in the higher education price index rounded up to the nearest $50 or $100. By operation of law, the bill also increases the maximum deduction amount available in an Iowa ABLE savings plan trust to the same amount for the current and future years.
   The bill also provides that a transfer made in a direct trustee-to-trustee transfer from a 529 account to a Roth individual retirement account in accordance with the rules under the federal Internal Revenue Code section 529(c)(3)(E) are exempt from state individual income taxation.
   The division of the bill applies retroactively to January 1, 2024, for the tax year beginning on or after that date.
   DIVISION II —— DISPOSITION OF UNCLAIMED PROPERTY. The bill creates regulations that are necessary for the methods of delivery, transfer, maintenance, and sale of virtual currency that is presumed abandoned. The bill allows the treasurer of state (treasurer) to decline to accept abandoned virtual currency if the treasurer of state determines that the virtual currency is (1) not freely transferable, (2) of nominal value, or (3) the value is less than the estimated expenses of maintenance, notice, or sale of the property. The bill allows the treasurer to sell abandoned virtual currency.
   The bill provides that the holder of property that are securities, brokerage accounts, or virtual currency shall provide notice to the owner that the holdings may be liquidated either prior to or subsequent to reporting to the state and will only be entitled to claim the proceeds of sale.
   The bill removes the requirement for publication of public notice by the treasurer for abandoned property, instead making it optional and at the discretion of the treasurer.
   The bill provides that the treasurer may pay or deliver property directly to a person if the person receiving the property or payment is shown to be the apparent owner included on a report for abandoned property and the treasurer reasonably believes the person is entitled to receive the property or payment. The treasurer may use state tax information to assist in identifying the owner of property.