Details of Public Law 119-21, section 70117 , One Big Beautiful Bill Act

The provision permanently allows amounts from qualified tuition programs (also known as 529 accounts) to be rolled over to an ABLE account without being included in gross income and without penalty, provided that the ABLE account is owned by the designated beneficiary of that 529 account, or a member of such designated beneficiary's family. This provision was set to expire under the Tax Cuts and Jobs Act (Public Law (P.L.) 115-97, section 11025) before January 1, 2026. Such rolled-over amounts count towards the overall limitation on amounts that can be contributed to an ABLE account within a taxable year. Any amount rolled over that is in excess of this limitation shall be includible in the gross income of the distributee in a manner provided by IRC section 72.

California conforms, under the PITL, to qualified tuition programs under IRC section 529, as of the specified date of January 1, 2025, with modifications.

In 2019, Assembly Bill 91 was chaptered to conform to Section 11025(a) of P.L. 115-97, relating to the temporary law allowing rollovers to ABLE programs from 529 accounts programs, and applies to contributions made before January 1, 2026. California does not conform to the new federal law that makes the rollover change for ABLE accounts permanent.

The estimated revenue impact to conform to the above federal provisions would result in the following loss:

26/27 27/28 28/29 29/30 ($60,000) ($40,000) ($40,000) ($40,000)