Page 282 - Small Business IRS Training Guides

After December 22, 2017, rollovers may be made without penalty from a section 529 plan, also known as a Qualified

Tuition Program (QTP) account, to an ABLE account, if the beneficiary of the ABLE account is the designated beneficiary

of the QTP account or an eligible family member. An eligible family member for purposes of the QTP to ABLE account
transfer is much broader than defined for the ABLE to ABLE account transfers. Eligible family members for QTP to ABLE

account transfers include the spouse or first cousin of the beneficiary and any individual or spouse of the individual who
has a relationship to the beneficiary as described in IRC 152(d)(2)(A) through (G).

Rollovers and transfers from a section 529 plan count toward the ABLE Account’s annual contribution limit.

Exercise 3

During 2018, $10,000 was distributed to Tom as the designated beneficiary of a QTP. He used $8,475 for college

expenses. The remainder, $1,525, was rolled over to his spouse’s ABLE account and was the only ABLE account
contribution in 2018. Tom’s spouse suffers from a disability. Is any portion of the $1,525 rollover taxable to Tom?

 Yes  No

Summary

The TCJA:

• Provision 11024 increased the contribution limit for some working beneficiaries to the lesser of earned income or

the poverty limit.

• Provision 11024 extended the eligibility for the Saver’s Credit to qualified beneficiaries who make contributions to
their own ABLE account.

• Provision 11025 allowed for rollovers and transfers from a QTP account to an ABLE account in some
circumstances.

73233-102 11024/11025-5 Tax Cuts and Jobs Act