In a proposed rule issued Monday, the Internal Revenue Service unveiled guidelines for the Achieving a Better Life Experience, or ABLE, Act. The federal law is designed to allow people with disabilities to save money without risking their government benefits.
The proposal offers specifics for the first time on how the new accounts should function and clarifies what types of expenses money saved in an ABLE account could be used for.
Advocates say they’re pleased that the IRS took a lenient view in determining what counts as “qualified disability expenses” under the law. Though the ABLE Act mandates that money can be used for specific purposes including transportation, housing and education, the law also allows for “other expenses” and it is up to regulators to determine what should qualify.
Other details within the proposal are causing concern, however. The reporting and oversight requirements outlined go beyond those governing 529 college savings plans that the ABLE accounts were modeled on and could make the disability savings vehicles onerous to administer or utilize, advocates and state officials say.