California lawmakers are considering a bill that would allow the state to deposit $250 in savings accounts for disabled people.
Senate Bill (SB) 1362, authored by Sen. Josh Newman and sponsored by State Treasurer Fiona Ma, would allow a state board to deposit the money into individual savings accounts and allow it, through its program, California Achieving a Better Life Experience, to make other financial incentives available.
Ms. Ma said she hopes the program, known as CalABLE, will help many disabled Californians keep afloat.
“[SB 1362] would help boost a program that has already shows the ability to significantly impact the lives of thousands of individuals with disabilities, helping many avoid living in poverty,” she said in a press release Feb. 22. “Giving CalABLE the ability to incentivize the accounts brings it in line with other state-sponsored savings programs and positions it for continued growth.”
CalABLE is the state’s savings and investment program for disabled residents. Those who participate can save for disability-related expenses by putting money into tax-advantaged investments, while protecting their eligibility for public benefits programs, according to Ms. Ma.
After-tax contributions allow earnings to grow tax-deferred. Withdrawals, when used for qualified disability expenses, are federal and state tax-free.
SB 1362 was introduced Feb. 16. The $250 is one-time only and would be deposited in accounts opened on or after a date to be determined by the program’s board of directors. The date would not be before July 1, 2025, according to the legislation.
The beneficiary of the savings account must also be a California resident and have at least $50 in it.
The program’s funding and implementation is dependent on the Legislature, according to Mr. Newman’s office.
With the state facing a deep deficit in this year’s budget, the bill might have to wait before being funded, Brian Wheatley, a spokesman for Mr. Newsom, said. “When we get into a better position, we can allocate the funds to be able to fill those accounts.”
The bill doesn’t cap how many savings accounts could be funded, according to Mr. Wheatley.
CalABLE currently has more than 10,000 accounts, with about $127 million in assets, according to Ms. Ma. That only represents less than 1 percent of the state’s eligible disabled population, she said.
The bill’s sponsors hope the legislation, if signed into law, will increase participation.
“SB 1362 will encourage eligible Californians with qualifying disabilities to fully utilize the savings accounts to which they’re entitled,” Mr. Newman said in a press release. “This bill will encourage and assist disabled Californians to open a CalABLE account as a first step toward ensuring their long-term financial security.”
