The released Notice 2018-62 that describes regulations the IRS plans to issue to clarify the rules on increased contribution limits to ABLE accounts enacted as part of the Tax Cuts and Jobs Act.

Image copyright janpietruszk / 123RF Stock Photo

The ABLE Act, passed in December of 2015, added §529A to the Internal Revenue Code allowing for states to establish ABLE Accounts.  These tax advantaged accounts will be available to pay disability related expenses of qualified individuals.  If used in that manner the earnings of the account will never be subject to tax.

However the accounts must be enabled by the states who either establish such a program or contract with another state to establish such a program.  This will generally require enabling legislation to create the program, allow for the management of other state’s programs and/or allow a state to contract with another state to manage that state’s program.