Virginia has become the first state to pass legislation implementing the ABLE Act, giving people with disabilities and caregivers in the state the ability to create special tax-free savings accounts for disability-related expenses.
President Obama signed the Achieving a Better Life Experience Act into law December 19. The bill creates a new Section 529A of the Internal Revenue Service Code. The new IRS section allows special accounts into which people can contribute up to $14,000 per year, up to a maximum of $100,000. The savings can be used for disability related expenses without sacrificing eligibility for Medicaid, Social Security Income and other federal benefits programs.
However, states must first pass implementing regulations before financial institutions can provide these services to people within those states.
On March 17, Governor Terry McAuliffe signed legislation enacting the ABLE Act in Virginia. The bill passed the state Senate unanimously and state House by a vote of 92 to 5.
The law also requires the Treasury Department to issue its own regulations and guidance by July 19, six months after the law’s passage. On March 10, the IRS released a short notice, encouraging states to pass legislation in the interim.
“The Treasury Department and the IRS do not want the lack of guidance to discourage states from enacting their enabling legislation and creating their ABLE programs, which could delay the ability of the families of disabled individuals or others to begin to fund ABLE accounts for those disabled individuals,” the IRS rule stated.
According to Disability Scoop, legislation implementing the ABLE Act is under consideration in 29 other states.
“So far we’ve seen a lot of legislative victories and we expect more as the weeks go by,” Heather Sachs, director of state government affairs for the National Down Syndrome Society, told Disability Scoop.