New ABLE Account Final Regulations: Eligibility, One Account Rule, Disability Recertification, Limitations, and More

ABLE accounts have provided critical planning tools for families who need to provide for the care and well being of aging or disabled family members. However, the implementation of ABLE account programs at the state level exposed several limitations that the 2017 tax reform law corrects. Now, recent final regulations provide additional clarity and guidance that significantly impact ABLE accounts and planning considerations.

ABLE accounts are tax-favored savings accounts set up under state ABLE programs allowing eligible individuals to make contributions to meet qualified disability expenses. On Oct. 2, 2020, the IRS issued final regulations guiding eligible individuals who are the owners and designated beneficiaries of ABLE accounts on various issues involving the requirements of Section 529A.

The final regulations explain the requirements a state ABLE program must satisfy to be considered a "qualified ABLE program" under Section 529A. They also outline recordkeeping and reporting, requirements for establishing an ABLE account, qualifications for eligible individuals and beneficiaries, and contribution limitations.

Elder law attorneys must understand the nuances and implications of ABLE accounts under current tax law in light of the final regulations to ensure that clients' goals are met and the use of ABLE accounts cooperates with special needs trusts to bolster care planning strategies.

Listen as our panel of experienced practitioners discusses the final regulations for ABLE accounts and the interplay with special needs trusts, as well as how elder law attorneys can employ critical changes in these tools' tax treatment to offer strategic guidance to clients.