Savings programs for disabled individuals; guidance for section 529A plans

Savings programs for disabled individuals

The Treasury Department and IRS today released for publication in the Federal Register proposed regulations (REG-102837-15) under section 529A as guidance for states and state agencies to establish and maintain a new type of tax-favored savings program, under which contributions may be made to the account of an eligible disabled individual to meet qualified disability expenses.

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The proposed regulations [PDF 287 KB] are being issued to implement the section 529A provisions that were enacted in late 2014 as the “Achieving a Better Life Experience” (ABLE) legislation.

The proposed regulations provide guidance on the requirements a program must satisfy in order to be a qualified ABLE program under section 529A. For example, the program must, among other items:

  • Be established and maintained by a state or a state agency or instrumentality
  • Permit the establishment of an ABLE account only for a designated beneficiary who is a resident of that state or a state contracting with that state for purposes of the ABLE program
  • Limit a designated beneficiary to only one ABLE account, wherever located
  • Permit contributions to an ABLE account established to meet the qualified disability expenses of the designated beneficiary
  • Limit the nature and amount of contributions that can be made
  • Require a separate accounting of an ABLE account for each designated beneficiary

A public hearing is scheduled for October 14, 2015. Comments on the proposed regulations as well as topics to be discussed at the hearing must be received by a date that is 90 days after publication in the Federal Register, scheduled for Monday, June 22, 2015.

 

Read a related IRS release.

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