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New IRS Guidance Will Simplify ABLE Program Administration

 
November 20, 2015

he U.S. Department of Treasury, in conjunction with the Internal Revenue Service (IRS), released interim guidance earlier this morning 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 certain sections of the ABLE Notice of Purposed Rule Making (NPRM) released this past June.  Those areas of concern addressed in the interim guidance are as follows:

  1. The requirement to establish safeguards to categorize distributions from ABLE accounts;
  2. The requirement to request the taxpayer identification number (TIN) of each contributor to an ABLE account; and
  3. The requirements for disability certification that would make it mandatory for the individual with a disability to submit a signed physician’s statement regarding their eligibility for an ABLE account.

 Key Points:

  • 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 solicit 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.

The ABLE National Resource Center is extremely pleased with the contents of the interim guidance, and believes that these specifications will significantly assist in the development of more readily accessible ABLE programs and ABLE accounts that can more adequately meet the needs of qualified individuals with disabilities.

To read the official IRS interim guidance, please visit the IRS website.

For more details, please contact Chris Rodriguez, National Disability Institute Senior Public Policy Advisor, at crodriguez@ndi-inc.org.