Last year, President Obama signed the Achieving a Better Life Experience (ABLE) Act into law. The ABLE Act created a new type of savings account designed to help people with disabilities save money without risking their eligibility for government benefits.
The Internal Revenue Service (IRS) has proposed some regulatory rules governing how the new program will run. The rules have been posted at the Federal Register for public comment before they become official.
Among other things, the rules would require:
- At the time the ABLE Act account is created, the beneficiary must provide evidence that they have a disability, such as a disability benefit verification letter from the Social Security Administration, or a diagnosis signed by a physician.
- According to the ABLE Act, the account must be used for "qualified disability expenses." The proposed IRS regulations interpret the term broadly, to include basic living expenses related to maintaining or improving health, independence, or quality of life. Qualified disability expenses would not be limited to medical necessities.
If this issue is important to you, you can read the proposed regulations and share your thoughts at the Federal Register here: https://www.federalregister.gov/articles/2015/06/22/2015-15280/guidance-under-section-529a-qualified-able-programs
The IRS has specifically requested comments on what types of expenses should be considered "qualified disability expenses" and under what circumstances. However, people are welcome to comment on any area of the regulations.