Page 275 - Small Business IRS Training Guides

Tax Cuts and Jobs Act

Provisions 11024 and 11025

ABLE Accounts

Overview

Introduction

An Achieving a Better Life Experience (ABLE) account is a tax-favored savings account that can accept contributions for
an eligible blind or disabled individual who is the designated beneficiary and owner of the account. States can offer ABLE
accounts to help people who become disabled before age 26, and their families, save and pay for disability-related

expenses. These expenses include, but are not limited to, housing, education, transportation, health, prevention and

wellness, employment training and support, assistive technology and personal support services.

Contributions to an ABLE account are not tax deductible. Although a designated beneficiary may have only one ABLE

account, contributions can be made to the ABLE account by anyone including the designated beneficiary. The earnings in
an ABLE account aren’t taxed unless a distribution exceeds the designated beneficiary’s qualified disability expenses. A

portion of the earnings of a distribution in excess of the beneficiary’s qualified disability expenses is included in income
and subject to an additional 10 percent tax.

Provisions 11024 and 11025 of the Tax Cuts and Jobs Act (TCJA) enables some eligible individuals with disabilities to

put more money into their ABLE accounts, qualify for the Saver’s Credit, and roll money from their 529 plans into their
ABLE accounts.

73233-102 11024/11025-1 Tax Cuts and Jobs Act