The NFXF is a participating member of the ABLE National Resource Center
On Friday November 20, 2105 the US Department of Treasury and the IRS released interim guidance regarding the Stephen Beck Jr, Achieving a Better Life Experience (ABLE) Act. The interim guidance addresses several concerns expressed in the public comment period in reference to sections of the ABLE Notice of Purposed Rule Making (NPRM) released this past June.
The requirements addressed are those which:
- Establish safeguards to categorize distributions from ABLE accounts;
- Request the taxpayer identification number (TIN) of each contributor to an ABLE account; and
- Require the individual with a disability to submit a signed physician’s statement regarding their eligibility for an ABLE account.
- Categorization of distributions not required: There will be no requirement, for income tax purposes, for an ABLE administrator/program to establish safeguards to distinguish between qualified distributions and non-qualified distributions. The designated beneficiary will have to categorize distributions for purposes of determining their federal income tax obligation (primarily if the funds are used for a non-qualified expense).
- Contributors’ TINs not required: The current requirement that the ABLE administrator/program must collect the TIN of every contributor will be eliminated, provided that such ABLE administrator/program has in place a system which can adequately prohibit excess contributions from entering an ABLE account. If that system fails, the ABLE administrator/program must obtain that contributor’s TIN.
- Disability diagnosis certification permitted: In the circumstance that an individual is applying for an ABLE program through the Disability Certification process, the beneficiary will not be required to submit a signed document by a physician stating the potential beneficiary’s diagnosis (along with other sensitive medical information) to the ABLE administrator/program. However, the beneficiary will still be responsible for submitting a document, signed under penalty of perjury, that assures that the applicant does possess the signed physician’s document (including diagnosis). The beneficiary will retain the medically sensitive document and will be required to provide the document to the ABLE administrator/program or to the IRS if ever requested.
We believe these clarifications will assist in the development of ABLE programs and ABLE accounts that can meet the needs of qualified individuals with disabilities.
To read the official IRS interim guidance, please visit the IRS website.
Individual states continue to make good progress passing their necessary legislation and we remain hopeful that by the 3rd quarter of 2016 many of you will be able to begin opening ABLE accounts.
As more information becomes available we will notify you.