Section 191.1605 - Accounts, use of moneys - withdrawals, recapture - death of account holder, effect of1. For purposes of the tax benefit conferred under the long-term dignity savings account act, the moneys in a long-term dignity savings account may be: (1) Used for a qualified beneficiary's eligible expenses;(2) Transferred to another newly created long-term dignity savings account; and(3) Used to pay a service fee that is deducted by the financial institution.2. Moneys withdrawn from a long-term dignity savings account shall be subject to recapture in the tax year in which they are withdrawn if:(1) At the time of the withdrawal, it has been less than a year since the first deposit in the long-term dignity savings account; or(2) The moneys are used for any purpose other than those specified under subsection 1 of this section. The recapture shall be an amount equal to the moneys withdrawn and shall be added to the Missouri adjusted gross income of the account holder or, if the account holder is not living, the qualified beneficiary.
3. If any moneys are subject to recapture under subsection 2 of this section, the account holder shall pay to the department a penalty in the same tax year as the recapture. If the withdrawal was made ten or fewer years after the first deposit in the long-term dignity savings account, the penalty shall be equal to five percent of the amount subject to recapture and, if the withdrawal was made more than ten years after the first deposit in the account, the penalty shall be equal to ten percent of the amount subject to recapture. These penalties shall not apply if the withdrawn moneys are from a long-term dignity savings account for which the qualified beneficiary died, and the account holder does not designate a new qualified beneficiary during the same tax year.4. If the account holder dies or, if the long-term dignity account is jointly owned, the account holders die and the account does not have a surviving transfer-on-death beneficiary, then all of the moneys in the account that were used for a tax deduction under section 143.1160 shall be subject to recapture in the tax year of the death or deaths, but no penalty shall be due to the department.Added by 2020 Mo. Laws, HB 1682,s A, eff. 7/13/2020.