IRS final regulations for administering Achieving a Better Life Experience (ABLE) account programs were published in today’s Federal Register. ABLE accounts permit the accumulation of financial resources for the support of special needs individuals.
These final regulations combine two previously issued sets of proposed regulations. The IRS published the first proposed regulations in 2015, following enactment of the ABLE Act. A second set of proposed regulations was issued in 2019, incorporating guidance based on provisions of the Protecting Americans from Tax Hikes (PATH) Act of 2015, and the Tax Cuts and Jobs Act of 2017, both of which made significant changes to ABLE accounts.
Among the issues addressed in these final regulations are the following.
- Private contractors may be used by states to administer their ABLE programs.
- States may combine with one another to operate joint ABLE programs.
- States may limit ABLE program participation to in-state residents.
- An ABLE designated beneficiary may delegate authority to another individual to establish and manage an account.
- Successor designated beneficiaries may be named.
- An ABLE account eligibility safe harbor is provided by the final regulations.
- Contribution, distribution, and investment change rules are defined.
- Although these final regulations are effective upon the date of publication, a two-year transition period will apply.
An Ascensus Washington Pulse further explains these final regulations.