June 25, 2015

IRS Publishes Proposed Regulations for the ABLE Act

On June 19, the Internal Revenue Service (IRS) issued proposed regulations to implement the Achieving a Better Life Experience (ABLE) Act of 2014.  The proposed regulations were published in the Federal Register on June 22 and public comments are due on September 21, 2015.  The IRS also announced a public hearing scheduled for October 14, 2015.  Among the issues addressed in the proposed regulation are qualifications for eligibility, limits on contributions to the account, and qualified expenses. 


In recognition that some states have already established rules for the creation of ABLE Act accounts, the Treasury Department and the IRS make it clear in the preamble to the proposed rule "that States that enact legislation creating an ABLE program in accordance with section 529A, and those individuals establishing ABLE accounts in accordance with such legislation, will not fail to receive the benefits of section 529A merely because the legislation or the account documents do not fully comport with the final regulations when they are issued. The Treasury Department and the IRS intend to provide transition relief to enable those State programs and accounts to be brought into compliance with the requirements in the final regulations, including providing sufficient time after issuance of the final regulations in order for changes to be implemented."