Achieving a Better Life Experience (ABLE) accounts now have final regulations from the Internal Revenue Service. Published last Thursday, this is the latest in a series of recently published final regulations that address changes to programs and rules affected by the 2017 Tax Cuts and Jobs Act.

What is an Achieving a Better Life Experience (ABLE) Account?

ABLE accounts were created by the 2014 ABLE Act to provide tax-advantaged savings accounts for paying expenses related to a disability. The IRS says that distributions and earnings from ABLE accounts will not be taxed when used to pay for any of the following qualified disability expenses:  

• Housing
• Education
• Transportation
• Health
• Prevention and wellness
• Employment training and support
• Assistive technology and personal support services
• Other disability-related expenses

While using money from an ABLE account to pay certain expenses is tax-free, the IRS notes that “contributions are not deductible.”

What was included in the final regulations for ABLE accounts?

The ABLE Account final regulations address comments from proposed regulations and guidance for a number of issues:

• Recordkeeping and reporting requirements
• Gift and generation-skipping transfer tax consequences of contributions
• Federal income, gift, and estate tax consequences of distributions
• Changing the designated beneficiary
• Beneficiary eligibility for the saver’s credit
• Rolling over funds from the designated beneficiary’s 529 qualified tuition program account

Check out the ABLE account final regulations for more information.  

Read more about ABLE accounts on IRS.gov:

• “Tax Reform”
• “ABLE Accounts - Tax Benefit for People with Disabilities”
• “TD-9923, Guidance Under Section 529A: Qualified ABLE Programs”

Read more about recently published final regulations:

• Final Regulations for Business Meals and Entertainment Deductions Now Available
• Default Withholding Rate for Periodic Retirement and Annuity Payments Gets Final Regulations
• Final Regulations for Estate and Non-Grantor Trust Deductions, 100 Percent Bonus Depreciation
• Businesses Get Final Regulations, Additional Guidance for Deducting Interest on Expenses

Source: IR-2020-227