The IRS Publishes Proposed Regulations for the ABLE Act

On June 19, the Internal Revenue Service issued proposed regulations for implementation of the Achieving a Better Life Experience (ABLE) Act of 2014. These proposed regulations, titled Guidance Under Section 529A: Qualified ABLE Programs, were published in the Federal Register on June 22. Public comments are due on September 21, 2015. The IRS also announced a public hearing scheduled for October 14, 2015.

The proposed regulations address numerous issues, including the following: the relationship of a person with signature authority and the designated beneficiary of the account; qualifications for eligibility; status of an ABLE account when person is no longer disabled; limits on contributions to the account; potential penalties; and qualified expenses. The Arc and other advocates will be analyzing the proposed regulations in preparation for submitting comments.

Resource Offered on State-by-State ABLE Act Legislation

In December 2014, the Stephen Beck, Jr., Achieving a Better Life Experience (ABLE) Act was signed into law. Since that time, states have started to develop their own legislation to implement the federal law. As a result, in over half of the states, ABLE Act legislation has emerged in the past several months. To assist individuals with I/DD, their families, and advocates in tracking their states’ progress, The Arc has produced a comprehensive listing of state-by-state legislation. This can be used as an advocacy tool and offers valuable information, such as names and contact information of sponsors, current status of the bill(s), and a link to bill language.   The Arc plans to update this document on a weekly basis in an effort to provide the most current information. If you would like to view this document, please do so from The Arc’s website.

ABLE Act – IRS Publishes Notices to States Providing Some Guidance to States

On March 10, the Internal Revenue Service (IRS) announced Notice 2015-18 to provide advance notification of a provision it expects to be included in the proposed regulations for section 529A of the Internal Revenue Code regarding ABLE Act accounts. The notice makes two important points:

  • First, the “Treasury Department and the IRS do not want the lack of guidance to discourage states from enacting their enabling legislation and creating their ABLE programs, which could delay the ability of the families of disabled individuals or others to begin to fund ABLE accounts for those disabled individuals. Therefore, the Treasury Department and the IRS are assuring states that enact legislation creating an ABLE program in accordance with section 529A, and those individuals establishing ABLE accounts in accordance with such legislation, that they will not fail to receive the benefits of section 529A merely because the legislation or the account documents do not fully comport with the guidance when it is issued. The Treasury Department and the IRS intend to provide transition relief with regard to necessary changes to ensure that the state programs and accounts meet the requirements in the guidance, including providing sufficient time after issuance of the guidance in order for changes to be implemented.”
  • Second, the Treasury Department and the IRS advise the states that the ABLE Act guidance, when issued, may differ in various ways from the current section 529 education programs. “In particular, the Treasury Department and the IRS currently anticipate that, consistent with section 529A(e)(3), the guidance will provide that the owner of an ABLE account is the designated beneficiary of the account. In addition, the Treasury Department and the IRS currently anticipate that the section 529A guidance will provide that, with regard to the ABLE account of a designated beneficiary who is not the person with signature authority over that account, the person with signature authority over the account of the designated beneficiary may neither have nor acquire any beneficial interest in the account and must administer that account for the benefit of the designated beneficiary of that account.”

These are both important clarifications for states moving forward with legislation. The IRS notice can be found at the IRS website.

The ABLE National Resource Center Presents a FREE Webinar: Understanding ABLE

In collaboration with The Arc, National Disability Institute, Autism Speaks, National Down Syndrome Society, and the College Plan Savings Network, The ABLE National Resource Center will host a webinar titled “Understanding ABLE” on Thursday, March 26, 2015 at 2 PM EDT. The event will cover ABLE Act core components, as well as the status of implementation at both the federal and state levels. Marty Ford, Senior Executive Officer for Public Policy, The Arc is one of the featured speakers. Registration for this important event is now open and will be taken on a first come, first serve basis, Should you wish to join us, please sign up online.

Please note: Real time captioning will be provided for this webinar. For other accommodation requests, questions about the webinar, or the registration process, please contact James Thayer.

New Resources Available about ABLE Accounts for People with Disabilities

As readers of Capitol Insider are aware, The Stephen Beck, Jr., Achieving a Better Life Experience (ABLE) Act was signed into law on December 19, 2014 after many years of advocacy and bipartisan work in both the House and Senate. The Arc has released two fact sheets about the new law a summary and a more in-depth look at the law – to educate the disability community about how this law will work. These are the first of several materials that will be produced by The Arc, so look for a fact sheet designed to be more family friendly and updates when federal regulations are released and accounts are set up in states.

The law allows eligible individuals with disabilities the ability to establish “ABLE accounts” for qualified beneficiaries that resemble the qualified tuition programs, often called “529 accounts”, that have been established under that section of the tax code since 1996. The new ABLE accounts will allow more individual choice and control over spending on qualified disability expenses and limited investment decisions, while protecting eligibility for Medicaid, Supplemental Security Income, and other important federal benefits for people with disabilities, with certain restrictions.

Senate Passes ABLE Act

As previously reported, on December 3rd the House of Representatives passed the Achieving a Better Life Experience (ABLE) Act under Division B of H.R. 5771, commonly referred to as the “tax extenders” package.  On Tuesday December 16th the Senate passed the bill by a vote of 76 to 16 (with 8 Senators not voting).  The bill is expected to be signed into law by the President within ten days.

The ABLE Act will change the tax code to allow for tax advantaged savings accounts for qualified individuals with disabilities to save for certain expenses, such as education and transportation. Similar to existing “Section 529” education savings accounts, ABLE accounts will allow individuals and families to save for disability-related expenses to supplement, but not replace, benefits provided through Medicaid, Supplemental Security Income, the beneficiary’s employment, and other sources. If properly managed, funds in an ABLE account will not jeopardize eligibility for critical federal benefits. With a full understanding of account features, individuals and families can use ABLE accounts as another tool in planning for the lifetime needs of an individual with long term disabilities.

This bill includes age limitations and a cap on contributions, added in July by the House Committee on Ways and Means to reduce the costs of the bill. The Arc will issue a fact sheet reflecting the details of the bill as it has changed through the legislative process. Further details will come through the regulatory process as implementation occurs. Read The Arc’s statement on Senate passage of the ABLE Act.

ABLE Act Passes House; Awaiting Senate Action

On December 3, the House of Representatives passed the Achieving a Better Life Experience (ABLE) Act (H.R. 647) as a free-standing bill by a vote of 404 to 17 (with 13 Members not voting). On the same day, the House also passed the ABLE Act as Division B of H.R. 5771, commonly referred to as the “tax extenders” package (Division A, the Tax Increase Prevention Act of 2014, provides for tax extenders). A vote in the Senate on H.R. 5771, inclusive of the ABLE Act, is expected this week.

The ABLE Act aims to change the tax code to allow for tax advantaged savings accounts for individuals with disabilities for certain expenses, like education, housing, and transportation. Similar to existing “Section 529” education savings accounts, ABLE accounts would let individuals and families save for disability-related expenses to supplement, but not replace, benefits provided through Medicaid, Supplemental Security Income, the beneficiary’s employment, and other sources. If properly managed, funds in the ABLE accounts would not jeopardize eligibility for critical federal benefits. With a full understanding of its features, individuals and families could use the ABLE accounts as another tool in planning for the lifetime needs of an individual with long term disabilities. The version of the bill that passed the House includes age limitations and a cap on contributions, added in July by the Committee on Ways and Means to reduce the costs of the bill. If the ABLE Act becomes law, The Arc will issue a fact sheet reflecting the details of the bill as it has changed through the legislative process. Further details must come through the regulatory process.

The Arc Mourns the Death of Stephen E. Beck, Jr.

The Arc mourns the death of Steve Beck on December 8, just days after House passage of the ABLE Act. Steve was a tireless advocate for people with disabilities and a founder and leader of the efforts behind the ABLE Act (see article above). As the parent of two young daughters, one with Down syndrome, Steve was an integral part of the leadership team on the bill for the last eight years. Steve was a natural collaborator and coalition builder and his work was critical in moving the bill forward, even while he held a full-time job in an unrelated field. Those who worked with Steve admired him and his steady commitment and positive outlook. We will miss him.