The Internal Revenue Service has issued a notice in anticipation of the ABLE tax-free savings accounts that disabled Americans will soon have the ability to set up to cover expenses such as education, housing and transportation.
When Congress passed a temporary extension of dozens of tax breaks last December in the Tax Increase Prevention Act of 2014, it also passed the Achieving a Better Life Experience Act, also known as the ABLE Act, which authorizes the ABLE accounts.
The notice announces that the Treasury Department and the IRS currently anticipate issuing proposed regulations that will provide that the designated beneficiary of an ABLE account is the owner of the account. The notice also provides 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 may neither have nor acquire any beneficial interest in the account and must administer the account for the benefit of the designated beneficiary.
If a state does not establish and maintain its own qualified ABLE program, it may enter into a contract with another state in order to provide its residents with access to a qualified ABLE program, according to the notice. The statute directs the Treasury Secretary or his designee to issue regulations or other guidance to implement section 529A no later than June 19, 2015. Several state legislatures currently are in the process of enacting enabling legislation in order to ensure that their citizens may create ABLE accounts during 2015, according to the notice. While the Treasury Department and the IRS currently are working on section 529A guidance, they anticipate that ABLE programs may be in operation in some states before the guidance can be issued.
