Formal Comments on Reg-102837-15, Guidance Under Section 529A Qualified ABLE Programs

8 Pages Posted: 8 Oct 2015 Last revised: 12 Oct 2015

See all articles by Stephanie R. Hoffer

Stephanie R. Hoffer

Ohio State University (OSU) - Michael E. Moritz College of Law

Date Written: October 12, 2015

Abstract

In December of 2014, Congress passed the Achieving a Better Life Experience Act (the ABLE Act), which enacted Section 529A of the Internal Revenue Code. Section 529A allows states to create savings programs for individuals with disabilities. These programs, modeled on section 529 college savings programs, would permit eligible individuals with disabilities to open tax preferred savings accounts for coverage of disability-related expenses. Contributions to, earnings of, and qualified distributions from, these accounts are not counted as assets for the purpose of determining eligibility for government programs such as Medicaid.

These formal comments on proposed Treasury Regulations under section 529A propose ways in which the Treasury could bring its final regulations into greater conformity with Congress's stated purposes for enacting the Achieving a Better Life Experience Act: to facilitate private saving so that individuals with disabilities can maintain health, independence, and quality of life, and to provide secure funding for disability-related expenses. Specifically, these formal comments seek to clarify the impact of the flush language of Section 529A(b)(2) on account contribution limits. They also urge the Treasury to reconsider its application of LIFO principles of accounting to the disgorgement of excess contributions. Finally, the comments urge the Treasury to withdraw a proposed safe harbor that would permit states to cut off contributions to an ABLE account before the statutory aggregate contribution limit for the account has been reached.

Keywords: Achieving a Better Life Experience, ABLE, disability, Section 529A, tax-preferred savings, Medicaid eligibility

Suggested Citation

Hoffer, Stephanie R., Formal Comments on Reg-102837-15, Guidance Under Section 529A Qualified ABLE Programs (October 12, 2015). Ohio State Public Law Working Paper No. 310. Available at SSRN: https://ssrn.com/abstract=2670687 or http://dx.doi.org/10.2139/ssrn.2670687

Stephanie R. Hoffer (Contact Author)

Ohio State University (OSU) - Michael E. Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

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