On December 22, 2017, President Trump signed H.R 1, the Tax Cuts and Jobs Act, into law. Three provisions in the tax reform bill impact individual states’ ABLE programs as follows:
- Rollovers from 529 college savings accounts into 529A (ABLE) accounts, up to the annual maximum contribution amount, are now permitted under federal law. The state tax treatment of these rollovers is currently being determined by each individual state.
- Account owners who work and earn income are permitted to make contributions into their ABLE accounts in excess of the $15,000 annual contribution limit under certain circumstances. The designated beneficiary (ABLE account owner) is responsible for ensuring compliance with the ABLE contribution limits. State ABLE programs are in the process of implementing these changes and will provide updates accordingly.
- The Federal Tax Savers Credit has been extended to include contributions to ABLE accounts with some limits.
Please consult with your tax advisor for any specific guidance tailored to your situation.